Research on the Impact of Digital Transformation on Risk-Taking in Property and Casualty Insurance Companies

The implementation of digital transformation is strategically important for strengthening the risk-taking capacity of property and casualty (P&C) insurers as well as to safeguard the stable development of the broader economy and society. Based on microdata from 45 Chinese property-casualty insurers from 2014 to 2021, this study empirically examines the impact of digital transformation on the risk-taking of P&C insurers and its differentiation effect. The findings indicate that: (1) Digital transformation effectively reduces the risk-taking of P&C insurers and improves their risk-taking level. (2) The reduction in risk-taking brought about by digital transformation is more evident among smaller P&C insurers. (3) Large P&C insurers are able to effectively reduce their risk-taking by adopting an autonomous digital transformation model, while small and medium-sized P&C insurers significantly reduce their risk by adopting a collaborative transformation model. (4) The influence of digital transformation on risk-taking is primarily manifested in foreign-funded and Sino-foreign joint venture P&C insurers. Accordingly, this study proposes policy measures across five aspects to further advance digital transformation within the insurance sector: promoting digital development, facilitating personalized innovation, strengthening data security management, sounding the early warning system and expanding the international perspective.