On Coordinated Development Of Commercial Insurance And Social Insurance In Rural China

During the second decade of the 21st century, to "ensure growth, improve people’s livelihood and maintain stability"—the theme of the times—is becoming increasingly remarkable in many fields of China’s social and economic life; and the construction of the rural social security system turns even more urgent than anytime ever before. To promote the leap-forward development of China’s rural economy, meet the increasing demand of the great number of farmers for insurance and enhance social stability and harmony in rural areas, it is necessary for large commercial insurance companies to join hands with the departments in charge of rural social insurance in building China’s new rural social security system.Based on such background, this paper proposes the problem of coordinated development of rural commercial insurance and rural social insurance. Obviously, the problem is not whether they should be "developed in a coordinated manner" or not, instead, it is a problem of "how they can be better developed in a coordinated manner".This paper first makes empirical analysis and theoretical explanation on the evolvement of the relationship between rural commercial insurance and rural social insurance since 1991, believing that the deep-seated reason why their relationship fails to be fully optimized lies in the misinterpretation of relevant policy documents by the persons inside and outside the insurance industry. That "commercial insurance is the necessary supplement to social insurance" is actually the annotation of the urban social security system, but doesn’t fully comply with the actual conditions of the Chinese rural areas.Centering on the thesis of "coordinated development of commercial insurance and social insurance in the Chinese rural areas", this paper answers these two core questions, i.e. "what preconditions are needed for coordinated development?" and "how to accomplish coordinated development?", through a great deal of empirical analysis and by applying new institutional economics, welfare economics and related theories.This paper believes that the precondition for their coordinated development is to promote their current one-way "supplementary relationship" as shoulder-to-shoulder "relationship of complementing each other". Under this precondition, it attempts to start and foster the new model and route for China’s rural commercial insurance and social insurance during the transition period.How can coordinated development of rural commercial insurance and social insurance be achieved? What are the basic model and realistic route for coordinated development? The answers to these questions are the originality of this paper. In accordance with the operational concept that "the government and the market should respectively take charge of the matters concerning rural insurance within their duties", this paper points it out that the fundamental goal of coordinated development is to make the vast majority of the farmers enjoy the achievements from the country’s reform and opening up and get all kinds of required insurance protection services as soon as possible. Under the given assumption that "rural commercial insurance and social insurance complement each other", this paper proposes the "twin oars model" for their coordinated development. Essentially, such model is the solution used by the governments at all levels and the insurance companies to jointly build the insurance protection system for farmers. This solution leaps over the general definition in the current policy documents, over the literal expression of rural insurance in some textbooks, over the people’s fixed impression on China’s rural commercial insurance and social insurance in the middle and late 20th century and over the thinking set of the developed countries in building up their social insurance in the early period of industrialization.Traditional economics emphasizes the competition between economic parties and neglects cooperation; but new institutional economics values competition and all the more emphasizes cooperation. If competition can bring people vigor and efficiency, then cooperation can bring people harmony and efficiency. The theory of new institutional economics regarding "the system of interdependence, cooperation and mutual benefit" lays the core footstone for the "twin oars model".In the last chapter, this paper puts forward the core content of the "twin oars model"—the route of "all-in-one rural insurance". Its starting point and goal is to gradually change the status of isolating rural social insurance and commercial insurance in light of the Chinese farmers’demand for insurance. The "all-in-one rural insurance" is generally conceived as follows:through the new sales channels such as "village-stationed work office", bring into play the functional roles of village-stationed service clerks and intensify the popularization of insurance knowledge to make the farmers understand, know and participate in insurance; enable the farmers having effected insurance to get effective, convenient and reliable insurance services; and promote the fusion and linking between commercial insurance protection and farmers’ existing social insurance projects and display the roles of grassroots governments to make farmers get necessary gains in the coordinated development of commercial insurance and social insurance.Viewed from the actual conditions, the intrinsic elements of "all-in-one rural insurance", such as advanced insurance village, village-stationed work office, village-stationed service clerk and other elements, have been basically ready. If the external factors of "all-in-one rural insurance", such as policy and legal factors, are fully activated, the concept of "all-in-one rural insurance" under the "twin oars model" will play an inestimable role whether in building up the rural social protection system or in promoting the perfection of China’s rural financial service system. With regard to the specific application of this road, this paper believes that the strategy of differentiation should be adopted due to the vast rural areas, entirely different levels of economic development in different regions and different progress in establishing social insurance projects in different regions in China.