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中英保险消费差异分析


AbstractIt is generally accepted that in the Britain, the insurance is often popular among citizens, and it has grown in a mature period. At the same time, with the establishment and development of the socialist market economic system, China's insura

Abstract

It is generally accepted that in the Britain, the insurance is often popular among citizens, and it has grown in a mature period. At the same time, with the establishment and development of the socialist market economic system, China's insurance industry has been developing continuously and rapidly, and it has gradually penetrated into every field of social and economic life. In contrast, the number of insured people is increasing, and the consumption of insurance is becoming a new hot aspect of consumption. Although more and more insurance consumers enter the door of insurance companies, their motives and purposes are quite different. This essay will make an accurate analysis of people's insurance consumption psychology, and let us understand people’s motivation and purpose, thus grasping the effective demand of people's insurance consumption and actively develop insurance marketing activities. 
Key words: China and Britain;insurance consumption;difference

 

摘 要

众所周知,保险在英国是十分受欢迎的。保险业在英国已经进入了一个相当成熟的阶段。与此同时,随着社会主义市场经济体制的确立和发展,我国的保险业呈现出持续高速发展的态势,并逐渐向社会经济生活的各个领域渗透。与此相对应,投保者日益增多,保险消费正在成为新的消费热点。虽然越来越多的保险消费者走进保险公司的大门,但其投保动机和目的却大不相同,保险消费心理更是千差万别。准确分析人们的保险消费心理,对于中国平安人寿保险公司来说可以窥透其投保动机和目的,对把握人们保险消费的有效需求,积极开展保险营销活动具有十分重要的参考价值。
关键词:中英、保险消费、差异
 


Contents

Introduction 1
1Literature Review 2
1.1An Introduction of Insurance 2
1.2The Importance of Buying Insurance 2
1.3Previous Studies on Insurance Consumption 3
2Insurance Consumption Psychology Between China and Britain 4
2.1Insurance Consumption Psychology in China 4
2.2Insurance Consumption Psychology in Britain 5
3The Reason of the Insurance Consumption Difference 6
3.1Difference Cultural Background 6
3.2The Influence of Traditional Culture 7
3.3Different Risk Awareness 7
3.4Economic Reasons 8
Conclusion 8

 

 
 
Introduction
It is generally accepted that in the Britain, the insurance is often popular among citizens, and it has grown in a mature period. At the same time, with the establishment and development of the socialist market economic system, China's insurance industry has been developing continuously and rapidly, and it has gradually penetrated into every field of social and economic life. In contrast, the number of insured people is increasing, and the consumption of insurance is becoming a new hot aspect of consumption. Although more and more insurance consumers enter the door of insurance companies, their motives and purposes are quite different. This essay will make an accurate analysis of people's insurance consumption psychology, and let us understand people’s motivation and purpose, thus grasping the effective demand of people's insurance consumption and actively develop insurance marketing activities.
There is a long held view that insurance market activities promote economic growth through the financial intermediation role of mobilizing long term funds for financial markets. The nature  of the life insurance market makes it a better financial intermediary by serving as income replacement in the event of the death of a bread winner as well as savings instrument for consumers. Most importantly, the long-tail nature of life insurance policies ensures that funds mobilized from life insurance consumption are made available for financial agents through intermediation activities of the financial agents and markets. This function makes life insurance an alternative source of internal fund mobilization for the emerging economies like African which have traditionally been heavily dependent of foreign grants and loans for budgetary support.
According to Swiss Re (2011),Between 2001 and 2010, total insurance premiums in emerging markets expanded by 11%, with growth averaging 1.3% in industrialised markets. This growth in emerging markets was mostly driven by life sector with an average growth rate of 12.6% compared to 0.6% for industrialised markets. However, the growth in penetration of life insurance in emerging markets has been mainly concentrated in emerging Asian markets and in Latin America with China alone accounting for about a third of the total emerging market premium volume.Addressing this disparity is therefore important to enhance the role of life insurance as a financial intermediary as well providing the needed social protection for an ageing population.
Generally, this essay can be divided into five parts. The first part will give an introduction of the research background and research purpose. The second part will make some research on previous studies on people’s consumption psychology of insurance. The third par will make a comparison of people’s consumption psychology in insurance. The forth part will make an analysis of the reasons that generate these differences. In the last part, the conclusion will be made.

1Literature Review
1.1 An Introduction of Insurance
Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or preexisting relationship.
The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster. The insurer may hedge its own risk by taking out reinsurance, whereby another insurance company agrees to carry some of the risk, especially if the risk is too large for the primary insurer to carry.
1.2 The Importance of Buying Insurance
Insurance is almost as important to business as banking. It works quite simply by spreading over a large man-her of people, the rests or the losses which otherwise would fall on the few who actually suffer them. Fire, for instance, normally damages only a few businesses each year but almost all companies buy insurance to protect themselves against it. What happens is that most companies pay regular small amounts of money, called the premium, to insurance groups and so a large fund of money builds up. Then the few who have suffered fires claim the cost of the damages. After investigation, the claims are paid out by the insurance companies. For the operation to work, insurance companies have to calculate what is the chance or probability of certain events happening, and what the cost of making accidents good will be, and how many people will pay, what rates, to have protection. Premiums are fixed in proportion to the risk involved. There are four principles backing up every insurance contract. The first, known as indemnity, is that the insured should get back the same value as was lost. If you insure your watch against the risk of its being stolen then the insurance company will only pay out the cost of a similar, second-hired watch unless you make a special agreement with them. The second principle is that of agreeing that the insurer has to own, or have the insurable interest in, the property covered, both at the time of effecting the insurance and at the time of loss. This is usual for policies covering fire; but the insurance on ships and their cargoes can be transferred to new owners if required. Thirdly it is necessary that the agreement be concluded in good faith. Generally the company providing insurance cover charges a premium based on what he is told. If a company fails to mention that a warehouse sometimes contains explosives the underwriter may declare the contract not valid and refuse to y a claim if the warehouse blows up. Finally, insurers distinguish between remote and immediate causes of an event. If there is an earthquake and a house is damaged, catches fire and is flooded by firemen when putting out the flames, the compensation due will depend on the exact words used in the detailed insurance contract. Usually companies do not provide cover against earthquake damage, so the house-owner may not get any compensation for the effects of the fire or water, as these were a direct result of the earthquake.
1.3 Previous Studies on Insurance Consumption
Theoretically, the primary motive for life insurance consumption as propounded by Yaari (1965) was the concept of uncertainty of life. Subsequently, Hakansson (1969) also introduced income, wealth, interest rates and price as other factors that influence the consumption of insurance while Karni and Zilcha (1986) also introduced risk aversion into life insurance purchase. These factors have been examined empirically to identify the drivers of life insurance consumption. Generally, the studies into life insurance demand can be divided into two, individual life insurance determinantst and crosscountry determinants that looks at life insurance consumption from a macroeconomic point of view. Since this study is related to the later, the empirical review is restricted to studies from the macroeconomic perspective. In one of the pioneering studies in insurance consumption, Beenstock et al. (1986) find income, life expectancy and dependency ratio to have a positive impact on life insurance demand while social security expenditures negatively impact on life insurance demand in 10 developed countries. Brown and Kim (1993) further examine the drivers of life insurance penetration in 1987 using a sample of 45 countries. The authors identify income, insurance pricing, inflation, social security by government, dependency ratio and religion as the significant determinants of life insurance. Similarly, Outreville (1996) employed cross-sectional data on 45 developing countries in 1986 to examine the effect of agricultural status, health status, higher education, local market competition, foreign participation and financial development on life insurance consumption. The author finds that disposable income and level of financial development to significantly improves life insurance consumption. In addition, local market competition was also found to be significantly related to life insurance.
In providing evidence for the varying relationship between income and insurance consumption between emerging and development countries, Enz (2000) finds evidence for the S-curve relationship between per-capita income and insurance penetration where the income elasticity of demand for insurance for emerging countries is greater than that of the developed countries. Ward and Zurbrueg (2002) also find evidence to corroborate the existence of the "S" curve with respect to the income elasticity of demand for life insurance in a comparative study on a sample of 37 Asian and OECD countries from 1987 to 1998. Beck and Webb (2003) also undertake a comprehensive study on economic, demographic and institutional determinants of life insurance consumption on 68 countries between 1961 and 2000. While inflation, banking sector development and income are found to have robust relationship with life insurance consumption, education, life expectancy, dependency ratio and social security expenditure had marginal significant effect on life insurance consumption.
Li et al. (2007) in examining the determinants of life insurance consumption in OECD countries find consistent evidence in support of the positive effect of income, level of education, financial development, insurance market competition and dependency ratio on life insurance consumption while life expectancy, inflation, real interest rate and social security expenditure decreases life insurance consumption. In examining the factors that drive the consumption of insurance in a sample of 90 developed and developing countries, Feyen et al. (2011) conclude that income, population size and density, demographic structures, religion, financial development proxied by private credit to banking system, income distribution, size of public pension and state ownership of insurers as the significant drivers of life insurance consumption. Elango and Jones (2011) investigate the drivers of insurance demand on emerging economies from 1998 to 2008. The authors find evidence which suggests that Gross National Income (GNI) per capita, interest rate and merchandise trade have significant positive effect on life insurance density whereas GDP growth rate and business freedom were negatively related to life insurance density. The authors also conclude that demographic factors explained higher variations in life insurance demand compared to both economic and institutional factors. Kjosevski (2012) employs fixed-effects panel regression for 14 Central and South- Eastern Europe (CSEE) countries from 1998 to 2010 to identify GDP per capita, inflation, health expenditure, level of education and rule of law as the significant determinants of life insurance.

2Insurance Consumption Psychology Between China and Britain
2.1 Insurance Consumption Psychology in China
2.1.1 Following the Consumption Trend
The so-called smart herd mentality, refers to under the influence of social, fashion, consumption trend, social groups and other factors, people has some tendency to pursue consistent psychological fashion, its occupation class and group. Consumers are often lack of ideas, and they always tend to be likely to be effected by others who are sensitive to fashion. Specifically, to the insurance of insurance consumption, because people are always lack of relevant knowledge about it, once they heard the people around them said the insurance is useful and meaningful, and they will follow the trend to buy insurance as well. Alamode herding phenomenon existed in social life, and this phenomenon probably stems from the psychology of following others and people’s lack of understanding and confidence. This kind of person has a lot of blindness, and since the ideological foundation is not stable, and its consumption enthusiasm cannot be lasting.
An important assumption under the competitive market model is that both the buyer and the seller have complete information. However, in fact, potential policyholders are always more aware of their own risk than the insurer, and the difference in information between the insurers is unavoidable. Among them, reverse selection is the main form of information asymmetry. The so-called adverse selection refers to the parties in the contract that accept people with private information, and such information may be detrimental to each other, and they will use these possible adverse information on the other side to sign a contract for their own benefit. The adverse selection of insurance market means that the insurance personnel do not know the degree of risk of the insured before signing the contract. When the average degree of risk of the insurance is insured, the policy holders with higher risk type will be more economical and more willing to take part in the insurance.
2.1.2 Pursuit of high return
The pursuit of good and low price product and service is the nature of the people, and the consumer has a different degree of preference for the price. But there are also such kind of consumers who pays too much attention to price. For them, the change of price is almost the only factor to determine whether they will consume the product. To be more exact, to the insurance consumption, when people buy insurance, they always pay attention to the performance of the insurance, how much money they will spend to buy insurance. Apart from it, the interest rate is also the key point for them to decide whether they will buy this kind of insurance. For Chinese, they tend to choose the lowest price of insurance products.
For Chinese, commercial insurance is a kind of non desired goods, and they have very strong alternative, and the consumption of the uncertainty of the results, many people on the insurance consumer mentality is more complex, usually are not risk accidents and their life together, thus the risk only in the risk not to regard it as right, after the injury, only pay attention to the risk prevention the thought of insurance benefits. These people have a certain understanding of insurance, but the insurance demand and their actual interests linked to consider trade-offs, profitable to actively participate in, or take the selective insured against risk, the higher the degree of risk will be transferred to the insurance company, the risk degree is low as is not insured, the adverse selection is the theory of information asymmetry described. Adverse selection is not conducive to the insurance company's insurance contract choice. It shows that people who want to insure for a specific risk are most likely to have such a risk, so they are also the most likely to get compensation. An extreme example of adverse selection is insured sick in health insurance, the insured is impure, deep thought hidden plots are not different from others. Adverse selection is not only a serious threat to the business operation of insurance companies but also to the interests of all the insured.
2.2 Insurance Consumption Psychology in Britain
2.2.1 High Safety Awareness
As the insurance has the characteristics of risk compensation, it can compensate the risk exposure of the insured, thus deriving the safety psychology of the insurance consumption. The American psychologist Mas slow believes that human beings have five kinds of needs. One is the physiological needs; the second is the demand for security; the third is the social needs; the fourth is the demand for respectful; and the fifth is the need for self fulfillment. In general, if one level of demand is relatively satisfied and will develop towards a higher level. The insurance demand is based on the physiological needs and it is an extension of the security needs. In particular, the demand for this special commodity is due to people's demand for security. As the weather is unpredictable, people will have good and bad fortune. The insurance itself has a savings fund, and it can be savings for the policy holders to pay insurance, and it can be used as an investment in the future. For example, for the current children's education, marriage and marriage insurance, pension insurance and so on have the characteristics of investment savings. Some people will consider this kind of insurance in the case of economic conditions. On the one hand, this kind of insurance has the role of security; on the other hand, there is also the role of saving value.
2.2.2 Pursuit Higher Life Quality
Insurance consumption is personal, and this is because the risk and the degree of the risk of insurance target are largely influenced by the behavior of insurance consumers. In the process of  buying insurance, there is a significant information asymmetry between the policy holders and the insurance company. The insurance consumers who have selfish profit psychology are very clear about the insurance company's functions, business methods and related regulations. They regard insurance as a tool to make profits. They have over insured or conceal the conditions of insurance, and intentionally transfer the risk that is expected to happen to the insurance company. Even some people will deliberately create insurance accidents to deceive the insurance company's "compensation". This psychology has contributed to the consumption of some insurance, but it is not conducive to the development of the insurance industry. With the improvement of the relevant insurance regulations and the standardization of management, this kind of psychology will also tend to decrease.

3The Reason of the Insurance Consumption Difference
3.1 Difference Cultural Background
Life is a concept of a wide range of issues, including people's clothing, food, housing, labor, work, entertainment, social interaction, embodied in the way of getting along with people such as material life and spiritual life values, moral values, aesthetic values, can be understood in a certain historical period and social period of social conditions, race, class and social life mode. Life style is an important content of human socialization, which determines the nature, level and direction of individual socialization. People in different societies, different periods, different classes and different professions with different social lives, can counteract the ideological consciousness of a person. The changes in the way of life can directly or indirectly affect a person's ideology and values. People from the same cultural group or even the same profession will have a different way of life, with different activities, interests and views.
Although China has adopted the gradual process of institutional reform and the process of marketization, it still leads to the increasing uncertainty of the residents in the future. For example, housing reform, education reform, wage reform, health care reform and employment employment system reform have increased the fluctuation of residents' income in the future and the rise of consumption level. Therefore, institutional change will affect the concept of consumption of household insurance.
3.2 The Influence of Traditional Culture
Traditional family thinking is reflected in the fact that children should bear their parents' medical expenses, children should be filial piety in economy, and parents should give their parents alimony every month. This factor has a great negative impact on the insurance demand of the family. But in the younger generation, because of the change of social concept and the gradual establishment of social security system, this traditional idea of old-age pension has not been dominated. At the same time, due to the increasing number of families have only one child, the future of the family tend to "4-2-1" type, and relying on children’s support becomes more and more realistic. In this trend, people will naturally give up on relying children to support their life when they get old, although it is widely accepted that whenever the children are, they should take the burden of spending some of the necessary costs for their parents, more people nowadays will consider to solve the pension problem buying insurance.
People learn beliefs, opinions, attitudes and values in culture. Most people's daily behaviors are learned from culture, including consumer behavior. Through learning, most people will respect their culture, accept their common values in culture and follow their cultural ethics and customs. Therefore, culture has a strong impact on insurance behavior. The basic function of insurance is to guarantee the risk, which is in accordance with the cultural background and value of the people. For example, in western countries, people have a great demand for insurance, which has a great relationship with the industrial and frugality of the West and the cultural concept of a stable life. In China, because of the traditional Chinese Confucian culture, that is, propaganda, regulation, tame and tolerance, it is unacceptable for people to take risks as the reward of heaven. This culture affects people's risk aversion, and insurance is considered inappropriate. At the same time, China's traditional culture and ethics influence of self-sufficient natural economy, "self-help" and "compensation", "maintenance" are all regarded as a kind of noble moral, and they can be revered by the people. On the other hand, with the industrialization of city, and the change of family structure, people in the process of modernization gradually lose the interpersonal relationship, and mutual relationship, and this makes people began to abandon the traditional idea and re-thinking of insurance. In a survey, 79% of the families who bought insurance disagreed the idea that "if I get the loss, many friends and relatives will come to help me."
3.3 Different Risk Awareness
In the history of human development, people will be engaged in all kinds of production activities and life process, the risk will always be encountered in their life. For their own stability, people have been looking for ways to avoid all kinds of disaster, and the purchase of insurance is an effective risk transfer way. Along with the economic and social development of social productivity, products are increasingly rich, the demand of people to the security of the property is more and more strong, and people’s risk consciousness is more and more strong as well. Thus, to realize the safety of insurance in this economic situation can increase the demand for insurance.
In addition, the social credit factor of the insurance company also has a great influence on the behavior of insurance consumption. With the further deepening of China's socialist economic system reform and opening up, the insurance has also been rapid development. The development and application of the insurance market also appeared to be obvious progress situation. However, with the development of insurance, a problem is emerging. Some insurance operators use traps to trap consumers' legitimate rights and interests. And this will increase consumers' distrust of insurance companies, which is a huge obstacle for further development of China's insurance industry. In this regard, the family's trust in the insurance company has a direct impact on whether the family chooses to be policy holder and which company will be insured.
3.4 Economic Reasons
The influence of price level on family purchase decision is that people will think that the price level will be rise in the future and they are always tend to be unwilling to buy insurance, so the demand for insurance will be greatly inhibited. The main features of the traditional life insurance is a solitary zero interest rate and fixed payment, which is stipulated in the insurance contract and it will be affected by the interest rate and inflation change, therefore, this will weaken the purchasing power of the currency to pay insurance, and reduce the actual security ability, so that people have no economic sense. When the rate of inflation is high, the demand for insurance will be suppressed, and the rate of return is rising and the renewal rate will be decreases.
Also, the level of family income determines the size of the insurance demand. The higher the household income level, the stronger the increase in the insurance demand will be. At the same time, with the increase of income level, the consumption structure will also change. According to Marshmallow's hierarchy of needs, with the increase of income, people will have the survival needs of the single consumer to consumer demand diversification, and security will become an indispensable part of people's daily life. As a result, this has fundamentally expanded the demand for insurance. A survey on the choice of insurance for different income families found that families whose income was below 40 thousand yuan will not buy insurance accounted for a large proportion of the number of households, and the demand for family insurance increased with the increase of income. The chance of the family that income is between 6000 to 8 000 yuan that buying insurance is 73.7%, the proportion of the family that income is between 8 million to 10 million that buying insurance is 77.2%. A possible explanation for this phenomenon is that when people's income reaches a certain level, people tend to be partial and self insured, and they will believe that their own economic strength can take risks.
Conclusion
Through the above analysis of the general insurance consumption psychology and the analysis of the family insurance consumption behavior, a preliminary insurance market is put forward. The paper basically achieves the purpose of the study, and draws the following conclusions:
Firstly, with the establishment and development of the socialist market economic system, the insurance industry in China shows a continuous and rapid development trend and gradually penetrates into all areas of social and economic life. In contrast, the number of insured people is increasing, and the consumption of insurance is becoming a new hot point of consumption. Although more and more insurance consumers enter into insurance companies, their motives and purposes are quite different. To accurately analyze Chinese and British’s insurance consumption psychology, we can see its motives and purposes of insurance, which is of great reference value to grasp the effective demand of people's insurance consumption and actively develop insurance marketing activities.
Secondly, the direct driving force of consumer behavior is people's psychological motivation. It is the internal driving force of the human, which can drive and urge consumers to consume activities in order to achieve certain purpose. And the insurance consumption is also controlled by certain psychology, this psychological performance is a stable state of mind, not easy to change.


 

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