| In accordance with the water communique, up to 2007, China has been suffering significant losses from floods with 103.89 billion Yuan per year since 21st century. Although the state government provides huge amount of relief with 4.75 billion Yuan annually, it means nothing to compensate the losses caused by floods. Few flood insurance products are available now in China, where, however, the demands to the flood insurance are much greater than the present supply in the flood insurance market.In order to reduce the increasing losses, worldwide nations has set up various compensation systems. Though with a long history of relief for flood, there are conspicuous flaws in the compensation system of China, in contrast with the U.S.A. and the UK. Unequal and inefficient resource allocation resulting from the unreasonable cost paid by unmotivated citizens and local government in high-risk areas, the government is not the only one who shall pay the financial losses. Flood insurance that encourages the insurer and the government to take measures to reduce the losses of floods, may create a stable environment for economic growth.The flood insurance is lack of sufficient capacity in China now. Since the subject matters of flood insurance do not meet the demand of independent and identical distribution, this type of insurance goes against the traditional principle of large number. The amount of compensation made by the domestic insurance companies is much smaller than that of real losses caused by floods. In recent years, by the ratio of 1: 100 between indemnity and losses, the government takes the majority responsibility in compensation without any support from commercial insurance.In the first chapter, it firstly introduces the topic of the article. Then it makes a summary on the research abroad and at home, and finds their flaws. In addition, it states the objective, significance and methodology employed in this article. Chapter 2 studies the insurable possibility of flood risk and its economic nature. It introduces the flood risk and flood insurance based on the concept and characteristics of risk, and the general theories of insurance. Secondly, according to the features of flood risk, it discusses the insurable possibility of flood risk by analyzing the factors affecting the insurable risks, indicates that flood risk is not a general insurable risk, and proposes the way to increase the insurable possibility of flood insurance. Thirdly, it analyzes the flood insurance products, as well as connotation, restriction and features of flood insurance. Finally, it studies the economic nature of flood insurance. It insists that flood insurance is quasi-public goods between pure public goods and private goods. Flood insurance possesses the characteristics of public goods, such as undividable utility and big scale of operation; whereas in other aspects it is of the features of private goods including competition of consumption and exclusiveness in benefits. Therefore such quasi-public goods can hardly work without the support of government.Chapter 3 makes analysis on the demands to flood insurance. Firstly, it summarizes the reasons of demands insufficiency based on the agricultural insurance dilemma, and analyzes the demands influenced by the game between the governments and individuals. Secondly, it discusses such four factors that motivate purchasement of flood insurance, as cognition and prevalence of flood insurance, preventive measures against floods taken by government, features of flood victims, social and economic features of individuals, and insurance willing. From above analysis, it concludes the purchasement utility function and purchasement probability of individuals and the interaction between them. Finally, taking the positive analysis on investigation of 405 local families in Boyang and Dongting as an example, the data proves that when the premium is higher than 100 Yuan, the percentage of "willing to buy the insurance" declines dramatically. The higher income they earn, the younger they are, the newer house they own, the more experience about flood they possess, and the more insurance they bought; the more these families are willing to buy flood insurance. The confidence interval of average premium that the families are willing to pay is between 80-100 Yuan. Chapter 4 focuses on the demands to the flood insurance. This chapter illustrates the underwriting manner and the factors that affect the decision process. Based on the investigation on the officials and assessors in property insurance companies in China, it analyzes the decision-making procedure of underwriting by expected utility theory and non-expected utility theory. Firstly, it indicates the characteristics of flood insurance supply from five aspects: flood risk, information asymmetry, risk cost, financial features of insurance provider, and criterion of government measures. Secondly, it sets up a flood insurance supply mode on the basis of utility and risk decision-making theory. Finally, positive analysis is made on the questionnaire of 21 officials and 62 assessors in 12 property insurance companies and their branches, with following conclusions: (1) underwriting decision makers generally agree that low probability and high risk are the basic features of floods, and believe the adverse selection may occur in insurance supply; (2) underwriting decision makers agree with a cooperative operation between the government and private companies. Under this mode, the government plays an important role in policy enactment, while private companies are responsible for the business operation; (3) insurance supply decision makers will lower the supply affected by the uncertainty of probability, regardless of the losses. If the losses are taken into consideration, its amount is in an outstanding link with decisions. The larger the losses are, the less the insurer is willing to supply. Decision makers prefer the penetration of government into insurance market. In the current insurance market, the target of flood insurance is not fully in line with normal commercial insurance, which result in the insufficiency of flood insurance supply.Chapter 5 focuses on the international comparison of flood insurance and enlighten from it. It makes a remarkable introduction on commercial flood insurance framework in the U.K., and state flood insurance framework in the U.S.A. In addition, it makes a comparison among worldwide nations about laws, coverage, policy design, and fund investment. Finally, it summarizes experience of those two countries for the flood insurance framework in China: (1) appropriate behavior of government, (2) combination of prevent measures and rescue works, (3) good management of insurance and reinsurance, and (4) improvement of laws. Chapter 6 discusses the flood insurance mode to be taken in China, Firstly; it introduces the several modes of flood insurance taken in history, and proposes the principles and rules to be followed in framing the flood insurance in China. Secondly, according to the analysis made in Chapter 3, 4 and 5, it concludes that the flood insurance mode to be taken in China shall be a kind of cooperation among government, insurer, and the public, in which the government plays a leading role, run by commercial insurance companies in line with areas and stages.
|
PDF Full Text Request