Study On Chinese Prevention And Resolution Mechanism Of Insurance Contract Disputes

Insurance has significant impact on the development of our society.Since China recovered domestic insurance business in 1980, insurance has influenced all aspects of Peoples'life, and has gradually shown its own value. The insurance industry has developed rapidly. However, there is also hidden trouble behind the boom. Because of opportunistic behavior in the insurance market, the insurants' lack of knowledge of insurance, the incompleteness of the insurance contract and so on, the number of insurance contract disputes has increased notably, which has become an obstacle to the development of the insurance industry. How to prevent and resolve insurance contract disputes has become a problem to be solved.The prevention and the resolution of insurance contract disputes are closely related. Based on the contract theory, there is a connection between the cost of insurance contract disputes'prevention and the cost of insurance contract disputes' resolution. Sometimes one goes up, the other goes opposite. Prevention mechanism helps to reduce the number of insurance contract disputes, thereby reduce the cost of resolution mechanism. Resolution mechanism is conducive to curb opportunistic behavior, thereby save the cost of prevention mechanism. In addition, the process of dealing with disputes helps to collect information on the frequency and causes of disputes. The connection between the prevention mechanism and the resolution mechanism is the reason why the author studies them at the same time.In the process of studying the existing literature, the author has found that study on insurance contract disputes focus on how to avoid opportunistic behaviors of insurance agent, how to improve laws, regulations and terms of the contract, how to deal with specific cases with laws and principles of insurance and so on. Study on the mechanism of the insurance contract dispute resolution is less than that of general dispute resolution. Study specially on resolution mechanism of insurance contract disputes is mostly about arbitration mechanism. In 2005, the Chinese Insurance Regulatory Commission proposed to establish insurance contract disputes handling mechanism (mechanism for the insurance industry to handle disputes).It has attracted the attention of scholars on disputes handling mechanism of the insurance industry. However, study on the prevention and resolution of the insurance contract disputes, using economics, principles of management and law, is still to be developed.Study on the prevention and resolution mechanism requires analysis of characteristics and causes of insurance contract disputes. In this thesis, the author has analyzed the connotation, types, characteristics and causes of insurance contract disputes. Based on the theory of new institutional economics and trade associations, the author has also analyzed problems of the prevention mechanism of insurance contract disputes with micro, meso and macro economics, and tried to figure out how to solve them. With cost-benefit method and theory of institutional change, the author analyzed resolution mechanism of insurance contract disputes. Combining experience of developed countries, and regions and the situation in China, the author has tied to establish the prevention and resolution mechanism of the insurance contract disputes which would be fit for Chinese condition.This thesis is divided into seven chapters, as follows:Chapter 1 is the theoretical basis, In this part, the author has introduced theory of new institutional economics and trade association. The contract theory, agency theory, transaction cost theory, institutional change theory, state theory are inextricably linked. In order to understand of the role of theory in this thesis better, the author put them side by side. Besides, each theory contains different schools and ideas; in order to focus the author has only explained the part related to this article. Chapter 2 is an overview of the prevention and resolution mechanism of insurance contract disputes. In this chapter the connotation, types, characteristics and causes of insurance contract disputes have been analyzed first, in order to help to build prevention and resolution mechanism. Then, the framework and content of prevention and resolution mechanism in the thesis have been defined basically. Chapter 3 is an analysis of prevention mechanism of insurance contract disputes. With micro, meso and macro economics, related issues of prevention mechanism of insurance contract disputes have been discussed. In the part of microeconomics, complete information dynamic game model has been used to discuss the integrity of the insured and the insurer; multi-task principal-agent model has been used to discuss of the incentive mechanism of insurance company managers and insurance agents; the reputation model has been used to discuss how the credit system would affect behaviors of insurance company managers and insurance agents. In the part of mesoeconomics, the author has analyzed how trade associations would help to decrease the number of insurance contract disputes. In the part of macroeconomics, how the law system and government's administration would affect the prevention mechanism has been analyzed. Chapter 4 is an analysis of the resolution mechanism of insurance contract disputes. The cost-benefit method has been use to explain why different resolution mechanisms have been chosen by different parties as well as why different mechanisms exist at the same time. Meanwhile, theory of institutional change has been used to discuss the main executor, motivation, methods and processes of the establishment of the resolution mechanism. Chapter 5 is an analysis of history and situation of Chinese prevention and resolution mechanism of insurance contract disputes. Chapter 6 is an introduction of the prevention and resolution mechanism of insurance contract disputes in England, Japan Korea and Hong Kong. This part contains how governments and industry associations have established the prevention and resolution mechanism in those four countries or regions. Chapter 7 is the contradiction of Chinese prevention and resolution mechanism of insurance contract disputes. In this chapter, the author has defined goals and principles of establishment of prevention and resolution mechanism. Then, the author has discussed the role of insurance companies, insurance industry and the government in the process of establishing the prevention and resolution mechanism of insurance contract disputes.The main contribution of this thesis is as follows:firstly, the subject is a novelty. There is a great deal of literature relevant to insurance contract disputes and resolution mechanism, less of which specializes in both the prevention and the resolution mechanism of insurance contract disputes. This thesis concentrate on how to build a complete and unisonous system with the effort of the insurance companies, the insurance industry and the government, in order to prevent and deal with insurance contract disputes in an efficient way and integrate the resources of the prevention with that of the resolution mechanism. Secondly, the framework and contents of the prevention mechanism of insurance contract disputes is still an open and practical subject. Based on existing literature, the author has established a basic framework of the prevention mechanism of insurance contract disputes, which includes issues of insurance company management, insurance contract design, credit system, insurance knowledge publicity and insurance fraud prevention and so on. Insurers, trade associations and the government are all involved in those issues mentioned above in one way or another. Thirdly, in the analysis of the resolution mechanism of insurance contract disputes, the author has applied cost-benefit method to explain why different parties choose different resolution mechanism and why the government establishes diversified resolution mechanisms. Meanwhile, the theory of institutional change has been used in the analysis of the establishment of the resolution mechanism. It contains the main executor, motive, method and process of the construction of the resolution mechanism.