Study On The Insurance Regulatory System In The United States

The insurance industry is engaged in the risk business, with financial compensation and the transfer of risk function, the development of insurance industry plays an important role in promoting modern economic development, thereby strengthening insurance regulation has been driven by national government attention. However, because of the different factors such as the world level of economic development, social conditions and so on, there are significant differences in national insurance regulation. With the growing trends in internationalization of the insurance market and the strengthening of the mixed financial industry, the role of the insurance regulation becomes increasingly prominent in the insurance market and even in the financial markets. The U.S. insurance market is one of the world's more developed insurance markets, the U.S. insurance regulatory system is very mature and improved, especially the "separation of powers" model-based insurance regulation is very unique, but the outbreak of the subprime crisis, in particular, the bankruptcy of AIG Group, presents new challenges to the insurance regulatory system of the United States. While the bankruptcy of AIG Group, the insurance regulatory system exposed shortcomings in the United States mixed regulatory and on the other hand is sure about its regulation system on the supervision of the core insurance business, therefore, after the tested system of crisis U.S. insurance regulatory will become increasingly perfect. China's insurance market has a relatively short history, the insurance regulatory system is not mature yet, it with will face tremendous pressure in the international background. Therefore, study from the U.S. insurance regulatory system has an important practical significance to China. In addition, the study of system changes from the perspective of motives to the evolution of U.S. insurance regulatory system, can explain the differences in the insurance regulatory system, which has some theoretical significance.The formation and development of the U.S. insurance regulatory system is closely related to the development of the insurance market. From the evolution of the U.S. insurance regulatory system we can see that, the advanced nature of the insurance regulatory system in the United States is not innate, it evolves with the practice of the U.S. insurance market, which can not be separated from the U.S. economy. Strict supervision strategy on market-oriented was practiced from the early 19th century to the 20th century 60's, the U.S which was impacted by the economic development at the time. Strict control in insurance regulation was not appeared when its, in its early stages of development it was impacted by liberalism, the insurance market was not subject to supervision. As more and more insurance companies established, the insurance market was growing, more and more speculation appeared in the United States, which ultimately led to the outbreak of the Great Depression 1929-1933. Thus in such a large background, the strict supervision became a necessary requirement for development of the times, strict regulation policy in the U.S. insurance market appeared. Although strict control can avoid a major crisis of 1929-1933 again, but this supervision seriously hinder the development of the insurance company, which is not conducive to the domestic competition between the insurance companies, but also bad to the international business. Thus, imposed deregulation and prudential supervision of solvency strategy practiced from the 20th century 60s to the early 21st century in the U.S. Implementation of deregulation was to adapt the general trend of economic development on the one hand, and enhance the vitality of the insurance company on the other. However, in order to avoid the Great Depression of 1933 from happening again, insurance regulators were more caution on solvency regulation for the development of the insurance company to create a relaxed environment to ensure the solvency of insurance companies, at the same time to prevent the bankruptcy of the insured caused by loss. The U.S. insurance market has developed rapidly during this period, many mature management system and fee standards are established in this period, such as: insurance regulatory information system, financial analysis solvency tracking system, based on risk capital funds monitoring, cash flow testing and so on. If the strict supervision of the insurance regulatory system in the United States was the initial stage, then the solvency regulation can be called the maturity stage. The U.S. insurance regulatory system can not stop at this stage, because of the economy development. The U.S. insurance market is impacted by the evolvement of the U.S.'economy, there are more new products have been beyond the scope of solvency regulation not just an endless stream of new insurance, but also from under the mixed financial derivatives. Therefore, the United States, insurance regulation introduced to solvency regulation at the core of the three pillars of the new regulatory framework since the early 21st century period. The three pillars includes: market conduct, solvency and corporate governance structure, that is to say the U.S. insurance regulators should consider these three factors when monitor insurance companies. Subprime crisis'unexpected coming reveals the defects in the financial regulatory system including insurance regulation, which is also reminded that the insurance market on a single aspect of the regulation is no way to avoid the complex transformation of the economic environment caused by crisis, so three pillars of the new regulatory system will inevitably become the basic framework for insurance supervision times. Thus, the evolution of U.S. insurance regulatory system is promoted by the development of insurance market conduct, and meanwhile the U.S. insurance market is subject to the overall trend of the U.S. economic development.The content and features of the U.S. insurance regulatory system are closely related to the informal constraints. According to North's analysis of the causes of system change, informal constraints affect the occurrence of institutional change which including cultural background, the constitutional order, etc. The content and characteristics of the U.S. insurance regulatory system are affected by the informal constraints. The U.S. insurance regulatory system has a great relationship with the behavior of policyholders. When the policyholders are for insurance, whether it is based on the purpose of financial compensation or the purpose of considering the economic benefits, the insured will first take into account its own interests, to pursue the best interests, different policy holders'behavior will appear because of different cultural backgrounds from different countries, this uncertainty has brought a variety of insurance market, and then produce a variety of insurance regulatory systems. As a democratic state of law, the United States must develop its system based on the perspective of public interest. The U.S. insurance regulatory system is in fact monitoring risk factors of production between the owner's configuration, such regulatory oversight has not been stopped, but the speed is always less than risk change, therefore, the U.S. insurance regulatory system evolved in the regulation of risk by risk-driven process. Affected by the"separation of powers and the balance of powers", the, the United States to implement the insurance regulatory system in the United States is the dual federal and state regulatory approach, and which are implemented tripartite security by the legislative, judicial and administrative organs. This supervision containment the phenomenon of concentration of power effectively, and also transfers the power to a level state. In addition, the system of fixed fees for the U.S. insurance regulatory system provides an important and effective implementation of safeguards. Although the U.S. insurance regulatory system is more mature and complete, but with the economic environment changing, the system still exposes some problems in the sub-prime crisis, such as: non-uniform state regulation, regulatory overlap, regulatory loopholes and risk control mechanisms imperfect.Analysis on the U.S. insurance regulation system from a system change point of view is mainly from the perspective of system supply and system demand levels. Changes in U.S. insurance regulatory system are mainly caused by the demand system, which is closely related with the level of development in the insurance market. American's economic development contributes to the development of the insurance market, the insurance market has stimulated the insured and the insurance company who will then have more demand for new insurance products, that will inevitably cause the invalid on existing regulatory system and therefore, a new demand for the insurance regulatory system will occur. The evolution of the U.S. insurance regulatory system has proved that changes are caused by the demand side. Even so, the new system still has to take into account the interests of the system supply level. The system changes have to happen even after the system supply considers the constitutional order, institutional change costs, the net benefit of the upper system providers and other factors, when the demand side has the need. The new system should be consistent with the system of supply and demand levels of net interest on the demand, in fact the emergence of the new system is when the system of supply and demand sides reached a temporary equilibrium, but this equilibrium will change with the external environment and other factors, so the new institutional change may occur, thus, the system is constantly evolving and changing when the equilibrium in the system is not balanced.From the operation of major insurance companies, we find that the U.S. insurance regulatory system is valid in the regulation of most insurance companies particularly for life insurance companies. This shows that the insurance regulation system in the U.S. has been very mature on traditional insurance products'supervision, but the U.S. insurance regulatory system needs to be further improved for the more complex property insurance regulation and even operates a number of comprehensive supervision of insurance business. Even so, China's insurance regulatory system should be seriously absorb and learn from the U.S. insurance regulatory system for its mature and relatively effective.China's insurance market started late and developed slowly, China's insurance regulatory regime is immature in this context. But China's insurance regulatory system can not copy from the practice of the United States, because, firstly, there is a considerable gap in the external economic environment between China and the United States, which will inevitably lead to the different development of insurance market; secondly, there is difference in informal factors between China and the United States, Chinese is Confucian cultural background and the United States is not; Thirdly, China's insurance regulatory regime changes forced by the supply system, while the United States by demand system. These factors determine the development of insurance regulatory system between the two countries can not be exactly the same, when the Chinese government building the insurance regulatory system it can reference a number of successful and advanced methods from the United States, for example, you can adjust the China Insurance Supervision model, strengthen the incentive and restraint mechanisms to the legal system of insurance supervision, and so on. In short, there will be very broad future in insurance market, to develop effective insurance regulatory system in China will be of vital strategic importance.