An Analysis on the Profit Importance of Insurance Company's Insurance Acceptation Business

Insurance company's profitable strategy choice exists mountain and sea schools in China.In the former theory, insurance company is defined as a risk sharing mechanism and pursuit of underwriting profit. However, the latter locates in the pursuit of investment returns of financial institutions. Based on the empirical evidence of Chinese and foreign insurance companies, this paper finds that sea theory in China insurance industry has a better explanatory power. Insurance company's purpose is not to underwrite insurance business to make money, but to transfer blood for investment business. In addition, between insurance company insurance profits and investment income, there exists an apparent trade-off relation.Although the development of the insurance company's two big wheels is underwriting and investment business,the real driver of the development wheel is the size of the premium and return on investment. Deviated from them, insurance company will do little to improve its performance. Then, it is suggested insurance companies' short-term should follow the theory of sea. However, in the long run, with the development of insurance market, insurance company should comply with the purpose of the mountain theory.