Researching On China Modern Legal System Of Insurance Supervision

Risk prevention is the lifeline of the healthy development of the insurance industry. Solvency, corporate governance and market conduct regulation constitute the three pillars of modern system of insurance regulation together. Solvency regulation is the sole and life of insurance supervision in every country, as the core of insurance regulation. Insurance Functional Theory gives modern insurance industry three functions——economic compensation, financial intermediation and social management. The insurance function continues to deepen and expand, that makes the insurance funds enter into all fields of national economy. Meanwhile, investment risk of insurance industry becomes the primary task of risk prevention, taking the place of the operational risk. Obviously, the traditional market conduct regulatory model has been unable to adapt to new situation. Constructing five Lines of defense against the risk, which include management structure and internal control system, solvency regulation, on-site inspection, monitoring use of funds and insurance protection fund, has become the basic path of reform and development of China's insurance regulatory system.Solvency regulation is a systematic project, including static solvency regulation, dynamic solvency regulation, insurance capital regulation, insurance protection fund supervision and so on. From the perspective of intensifying solvency, this paper uses methods of historical analysis, economic analysis and comparative analysis to learns advanced control concepts , compact system design of solvency regulation and successful experiences in theoretical and practical aspects from Western countries, reflecting the establishment, development, difficulties and change of China's solvency monitoring system deeply, in order to make relevant policy recommendations to Improve China's insurance regulatory systemThe paper includes four chapters, in addition to introduction and conclusions.Chapter I: Basic Theoretical Research of Insurance RegulationWith the causes of insurance regulation as an entry point, this chapter elaborates on the need for insurance supervision, from the perspective of the public nature of insurance industry, the particularity of insurance contracts and the asymmetry of insurance market information. The public nature of insurance industry mainly expounds the liabilities,Supportability and universality of the insurance business. The particularity of insurance contracts focuses on analyzing the assentation and aleatory. The asymmetry of insurance market information analyses dialectically Information disadvantage of insurers and the insured person, and raises harmful effects of Moral hazard and adverse selection which are caused due to information asymmetry. On this basis, the paper analyses respectively the public interest theory, the private interest theory, the political theory of regulation and other Western insurance regulatory control theory. Also points out that Western insurance supervision theory is rooted in special political conditions and economic systems, different from Chinese characteristics in monitoring philosophy, policy choices and system design. We should sift out the true from the false. Contemporary goal of insurance regulation is to maintain the insurance market order and protect the legitimate rights and interests of the insurance applicant, the insured and the beneficiary, which is closely linked with our national character and the market economic structure. Thereinto, the former is the fundamental objective of insurance supervision, all the insurance regulatory work starting point and end point, and the cornerstone of sustainable development of insurance industry. The latter is the primary objective of insurance supervision, the premise of security and stability of the insurance market, and the main ways to protect the insured interests. Fundamentally, three-pillar of modern insurance regulatory system, including corporate governance regulation, Market conduct regulation and Solvency regulation, is determined by the goal of insurance supervision.Chapter II: The Formation and Development of China's Insurance Regulatory SystemChina's insurance regulatory system experience three periods of solvency regulation, equal emphasis on market conduct and solvency regulation, and solvency regulation with three-pillar as the core . This chapter focuses on in-depth study of the regulatory features and regulatory responsibility of solvency in different stages. On this basis, solvency is defined as the ability of insurance company to settle insurance liabilities due. The paper analyzes the connotation of solvency from the static and dynamic aspects and also discusses the connotation, main content and core position of solvency supervision.Chapter III: The Comparative Study of International Insurance Solvency RegulationThis chapter details and evaluates the design and innovation of insurance solvency regulation system of well-developed insurance market of the West in comparative analysis method and chooses the good absorption. U.S. insurance regulatory objective is to protect the legitimate rights and interests of insurance consumers, maintain the solvency of insurance companies and prevent unfair and destructive competition, practice a strict and comprehensive regulatory model, and adopt a dual regulatory regime of state regulation and federal regulation. U.S. states supervise the solvency of insurance companies in financial ratios method, risk capital assessment method and cash flow test method, and effectively identify the insurance companies with insufficient solvency , take appropriate consolidation, liquidation measures, and carry out the necessary remedial by setting up an insurance protection fund. Britain, as the main representative of the Anglo - Saxon "Ocean idea" , following the regulatory principles of "minimum intervention and maximum support", only the supervise solvency of insurance companies, and basically not intervene the terms of insurance contract﹑the premium rate and other market behavior. British Solvency Regulation has experienced two stages——statutory solvency margin regulation and supervision of risk capital. The latter strengthens supervision of insurance risk capital, by strengthening capital requirements and individual capital assessments. EU insurance solvency regulation is experiencing from Europe I to Europe II. Europe II is expected to officially promulgate before the end of 2012. The biggest advantage of Europe I is that it is easy to operate and comparable. But Europe I is unable to fully assess the risks of insurance companies. The assessments of assets, liabilities and reserves are difficult to reflect their true market price. It also fails to give full consideration on the diversified development trend of insurance and other issues. Europe II aims to Learn from the spirit of the new Basel II and establish a risk-oriented, overall and comprehensive insurance solvency regulatory system with three-pillar of quantitative analysis, qualitative analysis and information disclosure. To sum up the above arguments, the current solvency regulation of the western developed countries is changing from the statutory solvency margin regulation to risk-based supervision, and implements the mode that static and dynamic solvency regulation combined. Solvency regulatory models and standards have emerged a new trend of international integration. These provide important information and useful references hat for the construction of China's solvency regulatory system.Chapter IV: Evaluation of the legal system of China's insurance solvency supervisionThis chapter discusses in detail a number of specific rules of China's current Insurance solvency regulation system, including static solvency regulation, dynamic solvency regulation, insurance capital regulation and insurance protection fund regulation. Static solvency regulation Includes minimum registered capital regulation, capital margin regulation, liability reserve fund regulation and Solvency adequacy ratio regulation. About the dynamic regulation, China has developed a dynamic solvency testing rules of life insurance companies and property insurance company. However, there is still room for improvement. Because the use of insurance funds is related to the adequacy of insurance company solvency, we should follow the principles of security, dispersion, profitability and liquidity, and take bank deposits, portfolio investment and real estate investments as the main investment channels. Insurance protection fund is the last line of defense to ensure adequate solvency. It's significant for the interests of the insured person to raise, manage and use it scientifically and reasonably. Finally, this chapter points out that China's solvency regulation system still exists problems. The revelation of individual risk lacks. Solvency assessment isn't dynamic and forward-looking enough. And associated auxiliary systems are backward. In the future, the focus of reforming and improving china's insurance supervision system is to establish a venture capital assessment method, improve the internal management of the insurance company, prevent and resolve the confluent system risk in the use of insurance funds.