Mechanism On Optimization Of Risk Allocation Of Chinese Policy-oriented Agriculture Insurance

China is an agriculture country with frequent natural disasters. Farmers'aversion to agriculture risk and their evading behaviors will hinder the optimization of resources allocation. Moreover, agricultural disasters will damage agriculture production and even do harm to the stable development of economy and social stability. Agriculture insurance not only can protect the stability of agriculture production, but also can promote the optimization of resource allocation by optimizing risk allocation. So, it is important and urgent to study the risk allocation efficiency of agriculture insurance. The aim of this paper is that by analyzing its mechanism of risk allocation to improve the efficiency of risk allocation of Chinese policy-oriented agriculture insurance, therefore, to fulfill the resources allocation optimization and driving the development of agriculture.The paper is divided into two parts:the first part is to set up a theoretical framework of risk allocation optimization of the policy-oriented agriculture insurance. We make use of the risk allocation theory and cost transaction theory to demonstrate the necessity and endogenous of government intervention into agriculture insurance, the role orientation of government and the constraints of optimizing risk allocation of policy-oriented agriculture insurance. The second part is to improve the risk allocation efficiency of the Chinese policy-oriented agriculture insurance by bettering the mechanism design with the theoretical framework established above.The paper has made some progress as below:Firstly, demonstrate the endogenous of government intervention into agriculture insurance. As a risk management tool, agriculture insurance can optimize risk allocation to promote the development of agriculture. However, agriculture insurance is market failure. The intervention of government into agriculture insurance will help to transfer agricultural risks between different parties and optimize the risk allocation. Thus, the weakness of agriculture will be improved by agriculture insurance. So, government intervention into agriculture insurance is the inevitable transition of agriculture insurance. Secondly, reveal the constraints of optimizing risk allocation of policy-oriented agriculture insurance. Asymmetric information will be one of the most important problems that government has to be overcome to optimize risk allocation of agriculture insurance. Mechanism designs will remit the harmful impact of asymmetric information on agriculture insurance. However, implementation mechanism is necessary to protect the sustainable development of agriculture insurance because of the uncertainty and opportunism. So, mechanism design to bettering the information situation and maturity of implementation mechanism are the two constraints.Thirdly, set up the optimizing mechanism of risk allocation of Chinese policy-oriented agriculture insurance. Playing the role of Chinese government will help to set up a nation-wide agriculture insurance system and encourage farmers' participation. Subsidy with the character of signaling farmers'WTP (willingness to pay) and remuneration incentive on insurance company will lower the transaction cost and raise the risk allocation efficiency of agriculture insurance. The improvement of law and reputation system will help to maintain the efficient risk allocation of agriculture insurance. Thus, some suggestions are put forward to further policy-oriented agriculture insurance development.