Diversification strategies and risk: Does ownership structure matter? Evidence from the Chinese non–life insurance industry

This study uses a quantile regression model augmented with a Fourier expansion to examine the effects of product and geographic diversification on underwriting and asset risks across different ownership structures in the Chinese non–life insurance market. An analysis of the financial data of Chinese- and foreign-funded insurers from 2014 to 2023 (during the regulatory transition from the 12th to the 13th Five Year Plans and into the first 3 years of the 14th Five-Year Plan) reveals that the aforementioned effects vary across ownership structure and risk distribution. Product diversification is associated with lower risk for Chinese-funded insurers with strong operating stability but higher risk for foreign-funded insurers. Moreover, geographic diversification yields limited net benefits in terms of risk reduction, with concurrent product and geographic diversification increasing tail risk. Risk mitigation appears to be strongest when the product scope is broadened while the geographic scope remains restrained.