Institutional Conflit And Coordination In Development Of Insurance

After fifty years of development, insurance has made great achievements in China. Western management style which is popular applied in China insurance has improved efficient, stimulated work enthusiasm and thus realized market competition. While after years of development, some disadvantages come into being, such as lack of trust system, inefficient of human capital. All of these problems has begun to hinder the development of insurance.These difficulties are results of institutional conflict. It is obvious that this kind of management ignores the relationship between formal and informal institutions, overstates the effect of ration and ignores the effects of culture .As a result, this kind of conflict between formal and informal institutions caused the difficulties in insurance. The invalid of formal institutions is because of the ignoring the effects of informal institutions.The essence of the social contradiction is institutional conflict. From the aspect of conflict between old and new institutions, there are two kinds of contradictions. The first is conflict between institutions based on planed economy and market economy. The second is conflict between institutions based on market economy and traditional behavior based on culture. The former conflict is easy to find out, while the latter is ambiguous. Those informal institutions based on traditional culture play very important role in social life. Institution is kind of rule that limit the behavior of human being.While only when the identification of institution can get, it could be an institution that have effects.Forming and identification of an institution is not only based on rational choice, but also pay attention to the social conditions and the limits of rational choice. In a word, social management institution could come into effect only when the coordination is reached between the formal and informal institutions.Trust is a kind of system that can alleviate the complicated social association. Nowadays, trust crisis is popular in insurance development. The loss of mass identification toward insurance has begun to hold back the development of insurance. The trust crisis is deduced by institutional deficient and conflict. On one hand, the institutional conflicts and the malfunction of government supervision affect the trust system, on the other hand, the emergence of deputy institution caused the moral risk because of the seeking of individual profit. At last, the ignorance of informal institutions, such as traditional culture and social habits, is also an important reason that causes the loss of trust in insurance.The trust crisis embodies the conflicts among formal institutions in insurance, such as property right and individual deputy institution. At the same time, trust crisis embodies the conflicts between formal and informal institutions, such as relationship between risk identification and recognition. There are many factors that will affect risk, including not only individual, but also social elements. risk recognition will affect investing behavior directly. For a long time, insurance saling pay little attention to those informal institutions.We can make a conclusion that the trust crisis in China insurance is a result of conflicts between formal and informal institutions. To be honest is a key factor that can protect transactions. To be honest is a key competition factor. It help the improvement of insurance. In order to realize this kind of trust institution, the following institution should be set up, such as improving the recognition of risk among youngsters, insurance company and insurance association playing active effects, the construction of property right institution and law system, the culturing of trust atmosphere and so on.Since reforming, especially the beginning of 1990', competition become serious in insurance market. Because of fully opened to global market, the competition become more serious since 2002, and the market expanded quickly. While at the same time, the profit decreased in a quick speed. Some insurance companies have to face difficult situations.Through analyzing, we can conclude that the basic reason that causes the management dilemma is institutional conflict. It includes both formal conflicts, such as salary institution, and informal conflicts, such as the attitude of workers in insurance company. In order to solute the problem, institutional coordination and enterprise culture construction must be taken into consideration.Formal and informal institutions should be applied into management system. If managers pay more attention to formal management rules, it can provoke the self motive of the workers, while selfish become more and more popular and serious. Enterprise culture play important role in development and construction of enterprise. It helps to culture a flexible management environment, to form a value, to improve the quality of enterprise and to culture cooperate sense. To stimulate the self motive of workers, culture construction and institutional construction should be connected.Insurance is a knowledge-centralized industry. Knowledge capital is a main production factor, which helps the development of insurance in a healthy and continuous style. The deficient of human capital has hindered the development of insurance. It is a common problem that both new and old insurance companies have to face. Compared with money and management, human capital is a more serious problem. The malfunction of human capital management has become a factor that hinders the development of insurance.The malfunction of human capital management is a main dilemma. The problem has caused serious results. At first, the cost of mobilization increased. Second, efficient decreased. The applying of social capital is a key to understand the human capital in insurance. As an informal institution, social capital plays essential role in successful of transaction. The economic behavior embeds in social nets. Social capital is an important prerequisite and a necessary condition for a successful transactionThe malfunction of human management in insurance is a result of conflict between formal and informal institutions. Human capital management system is very complicated. The coordination between formal and informal institutions is a key factor to make management system healthy. In order to realize this goal, the following institutions should be set up, such as inspiration institutions, education institutions, communication institutions and mobilization institutions.Just like the relationship between law and morality, the governing of a society depend not only formal institutions, but also informal institutions, to obey the informal institutions is a prerequisite of efficient governing. In this sense, formal institutions should accommodate to those informal institutions. Only to place into special surroundings, can we talk about the efficiency of certain institution.The institutional origin in insurance development lies in two aspects. That is conflicts among those rational formal institutions and the conflicts between formal and informal institutions. In order to solute the difficulties that threaten the development of insurance, the followings are essential:Government pays more attention to commercial insurance. China has experienced great changes in social life. All these reform have enhanced social efficiency, propelled social development. As a formal institution, commercial insurance plays important role in maintaining of economic development.It is essential to improve risk conscious among people in the development of commercial insurance. This belongs to informal institution. Informal institution also plays important role in politics and economy. It affects all aspects of daily life. In China, informal institutions seem more powerful.It is a basic condition that the commercial insurance improve their own management level. At first, efficiency and honesty should be realized. For those basic insurance markets, profit depends on the investment and management of money. Insurance industry has to face high risk. The development of insurance should obey laws, rules and institutions.It is important to set up supervision institution to manage mobilization and cultivate a special enterprise culture. Cultural power will bring both economic and social effects. It is not only a management, but also a guidance of value and a life attitude. It is not only a work place, but also a culture system. It can not only improve income, but also show a cultural atmosphere. Just like an invisible hand, enterprise culture propels or limits the development of economy.The reform of insurance must pay attention to its own feathers. Institutional coordination requires formal and informal institutions play their own effects. Otherwise, serious culture conflicts would come into being and cause serious results.Institutional coordination is essential in perfecting insurance development. Institutional coordination needs a balance between formal institutes and in formal institutes. Institutional coordination must base on a real social foundation, such as special Chinese society, cultural and economic setting and the background of actors behave, etc.