A Study On The Legal System Of Our Compulsory Agricultural Insurance

Agriculture is the basic industry of national economy, so to realize thesustainable development of agriculture and rural economy is the premise for theestablishment of socialist market economy system and the realization of agriculturalmodernization. Agriculture has always been a high-risk industry, and China is one ofthe few countries with natural disasters of more types, frequent occurrence and mostsevere losses in the world. With the entry into WTO and the liberalization of trade inagricultural products in the world, China is faced with more and more externalcompetitiveness and risks in every aspect. Therefore, as a management tool inagricultural risks, agricultural insurance should become an indispensable andimportant system in Chinese agricultural development and protection.At present, the agricultural insurance services run by Chinese commercialinsurance companies have made the agricultural insurance market fall into such asituation of market failure with"insufficient demand and supply shortage"due to thelack of legal guarantee and corresponding agricultural insurance system. From 1984to 2002, the maximum and average loss ratios of Chinese agricultural insurancereached 136% and 92.2% respectively, and the loss in agricultural insurance servicesreached up to 20% with the addition of 20% to 30% management costs. Moreover,the agricultural insurance system in China is still in deficiency. The currentInsurance Law of this country makes practically no specific guiding provisions foragricultural insurance services, so it is urgent to solve such a problem as lack inpolicy and law in the field of agricultural insurance.The current studies of the policies and legal system of agricultural insurance inChina are still in the initial stage, and the research approaches of domestic scholarsto agricultural insurance models mainly focus on the policy-oriented and self-service agricultural insurance. Most scholars tend to promote in China policy-orientedagricultural insurance with public subsidies, or the mutual and corporativeagricultural insurance organizations to operate agricultural insurance. On the onehand, these proposed operational models put forward new ideas for Chineseagricultural insurance; on the other hand, they are also partially in conflict with thecurrent agricultural development in China. Therefore, the purport of this thesis is toelaborate that compulsory agricultural insurance system can effectively avoid marketfailure by analyzing the legal value of compulsory agricultural insurance andstudying the social demands of such an insurance system, and to determine thebusiness and operational model of Chinese compulsory agricultural insurance bycomparing the status of domestic agricultural insurance and that of foreignagricultural insurance and learning from the latter.This thesis can be divided into five chapters.Chapter One is"The basic theory of agricultural insurance system". Startingfrom the basic concepts of agricultural insurance, this chapter introduces thedefinition, types, characteristics and management methods of agricultural insurance,and then elaborates the"quasi-public goods"character of agricultural insurance ineconomics based on its definition, insurability and characteristics. Finally, on thisbasis, it analyzes the concept, characteristics, attributes and major functions ofcompulsory agricultural insurance system.Chapter Two concerns"The analysis of legal value of compulsory agriculturalinsurance system". It develops mainly from such three aspects as its legitimacy,necessity and rationality. The analysis of the legitimacy first defines that compulsoryagricultural insurance achieves the value of justice of exchange for agriculturists at adisadvantage by redistribution of resources; and then illustrates its legal value inestablishing and protecting normal trading order and regulating trading behaviors;thirdly, it discusses the legal value of compulsory agricultural insurance system inguaranteeing the safety of agricultural industry and national economic development.In the analysis of the necessity, such four aspects as the status of agriculturaleconomy, farmer's demands in fighting against disasters, establishment of social security system and measures responding to WTO's protective measure ofagriculture are stressed to highlight its necessity. In analyzing the rationality, thethesis elaborates the public benefit and non-profit character of compulsoryagricultural insurance system and states its positive effects on the rate of marketparticipation, adverse selection, moral hazard from the perspective of overcomingmarket failure.Chapter Three is"The comparison of the legal systems of countries usingcompulsory agricultural insurance and the enlightenment."It first introduces thelegal system of foreign compulsory agricultural insurance and 11 countries fully orpartially applying such a system are selected for examples. The development offoreign compulsory agriculture system is analyzed from the aspects of administration,participation of the insured, costs, cover and risks, losses and indemnities, and linkswith credit and similar institutions; second, it concludes four points of enlightenmentfor the establishment of Chinese compulsory agricultural insurance system bysummarizing the foreign experience, namely, the establishment of legal guaranteesystem for agricultural insurance, affirmation of the legal status of compulsoryagricultural insurance system, set-up of special agricultural insurance administrativeagency, and provision of supportive policy for compulsory agricultural insurance.Chapter Four"Rethinks the optional models of Chinese agricultural insurance".The current development of agricultural insurance in China is faced with losses ininsurance services, insufficient governmental support and lower income of farmers.This chapter introduces the existing operational models of Chinese agriculturalinsurance, and summarizes the following four points with respect to the difficultiesin the development of Chinese agricultural insurance. Firstly, there is lack ofagricultural insurance legal system; secondly, it is difficult to effectively control themarket failure; thirdly, farmers'awareness and ability of insuring agriculture areinsufficient; fourthly, there is lack of time and space to disperse agricultural riskswidely. Lastly, it discusses the functions of compulsory agricultural insurance inmaking up the above-mentioned deficiencies.Chapter Five is"The path design of the legal system of Chinese compulsory agricultural system". Firstly, based on the legislation of Chinese compulsoryagricultural insurance, it should make clear the legislative intention of protecting thedevelopment of agriculture and rural economy, and promoting the development ofrural social security system; and it should establish such legislative principles ofcompulsory agricultural insurance as non-profit character, government-led andsupport and unity of fairness and efficiency; secondly, it puts forward severaloptional proposals for the operational models of Chinese compulsory agriculturalinsurance, including government-sponsored and government-run model, the modelsof mutual insurance companies with governmental support, and of government-ledcommercial insurance companies. It concludes that it is appropriate to adopt the firstmodel to develop compulsory agricultural insurance services and puts forward sometentative ideas about the set-up of its operating agencies on the basis of analyzingtheir advantages and disadvantages; thirdly, it presents some governmental supportpolicies for compulsory agricultural insurance, including government subsidies, taxcuts, disaster reduction and income increase, and establishment of catastrophic riskfund; lastly, it makes proposals for the regulatory contents of Chinese compulsoryagricultural insurance. What needs regulating includes not only the implementationof governmental support policies, but also the operation and management,application of funds and solvency of operating agencies of compulsory agriculturalinsurance. Besides, it puts forward basic ideas for the set-up and functions ofregulatory agencies for Chinese compulsory agricultural insurance.