The Root Cause Analysis of the Underwriting Profit Difference in Automobile Insurance-Analysis both from Supply and Demand

There are obviously difference for the underwriting profit of automobile insurance whatever basing on insurance companies or basing on districts. In this article, the factors which affect the difference for the underwriting profit of automobile insurance are found from the supply of insurance companies and the demand of customers in different districts. The detailed contribution of all factors are also got by using Oaxaca-Blinder decomposition. The results show that there are some factors from the supply of insurance companies, such as the number of branches, listed company, operation year, macro-economic climate index and company character of insurance companies, all have an impact on the underwriting profits of the property insurance companies. The number of branches has the most important effect on the underwriting profit of automobile insurance. From the side of demand of different district, the economy development, average mileage and direct property loss in traffic accident all affect on the underwriting profit of automobile insurance, in which the economy development is the most important one. Deeply, the quantity of automobile insurance is still the most important strategy for insurance companies if they want to get some positive profit in automobile insurance now in China. As the amount of automobile is still keeping growing in these years of China, insurance companies must keep a comparative stable or increasing market share in automobile insurance market, otherwise, they can't get any profit. Unfortunately, any methods to improve the business operation quality are ineffective now.