The Comparison Of Major Developed Countries’ Insurance Regulatory System

Insurance regulation is an important means to keep insurance industry healthyand orderly development, and to protect the legitimate rights of insuranceconsumers.Under normal circumstances, the insurance regulation is government action. Itis a macro-level regulation and supervision, so the means of laws, regulations,administrative instructions and economic are often used. Most of the countries in theworld have already established their own insurance regulation system, and carry outregulation on insurance industry by establishing multi-level institutions and usingscientific means. The outbreak of the financial crisis in2008and its rapiddevelopment made us re-examine the content and scope of insurance regulation.In recent years, the insurance industry has developed rapidly since Chinaaccessed to the WTO. But many problems had been found during this process. In thepast, we frequently referenced the regulation concepts and models of the UnitedKingdom, the United States, Japan, Germany and other developed countries. Whilethe breakout of the financial crisis made us aware that it’s dangerous to just followother countries’ means, we need to establish a stable and effective mechanism toensure the healthy development of China’s insurance industry.This paper researched on the insurance regulation system of major developedcountries and the issues of risk prevention. It was aimed to give some inspire toChina’s insurance regulation system and financial risk prevention. First of all, thispaper combed the general theory of insurance regulatory system; then, it studied onthe insurance regulation concepts and features of the United Kingdom, the United States, Germany and Japan from part two to part five. In the sixth part, it comprisedthe similarities and differences of the major developed countries insurance regulationsystem and analyzed the industry’s trends. Finally, based on the experiences of thesedeveloped countries, it studied on how to improve China’s insurance regulationmechanism, and gave some meaningful conclusions.Insurance regulation can be divided into broad and narrow implications basedon different levels. Normally the narrow one is often used in general studies, and it ismainly about the regulation activities of the governments. The basic contents ofinsurance regulation include six aspects; they are supervision of insuranceorganizations, supervision of insurance market order, supervision of insurancesolvency, supervision of insurance investment, supervision of insurance agency andsupervision of reinsurance. The basic framework of insurance regulation includes itstarget, meaning, core principles and main mode. The theoretical system of insuranceregulation comes from the general theory of regulation; it mainly refers to theintervention of the government, commonly used means of laws and executive orders.The main theory of insurance regulation includes the public interest theory, theinterest groups theory, the cost of insurance supervision theory and the incompletelegal theory.There are three historical evolution of the United Kingdom insurance marketregulation system: before1970s, limited regulation stage;1970s-1990s, regulationlegal system construction stage; after1997, unified regulation stage. There are threeparticularities of the United Kingdom insurance regulation system. Firstly, it has themost complete insurance broker system in the world. Secondly, Lloyd’s is a modelfor the insurance industry self-regulation organization, and its participants are evenmore stringent than the general industry standard. Thirdly, the implementation of theEU insurance solvency standards II is an important content of its insuranceregulation. UK insurance regulatory system has the following characteristics: First, the government regulation is relatively loose, while industry self-regulation ishighlystringent; Second, the information is open and transparent, and it couldeffectively protectthe interests of consumers; finally, emphasizing the importance ofsolvency, and unified financial supervision.The evolution of the U.S. insurance regulatory system is also divided into threestages:from the mid-19th century to the1960s, strict supervision stage; from the1960s to the early2000s, deregulation and solvency prudential supervision stage;from the beginning of the21st century to nowadays, integration of the regulatorypower stage.U.S. insurance regulation aims to protect the interests of the insuredperson. It emphasizes to regulate the insurance rate, solvency and the interactionbetween insurance regulation organizations and insurance rating agencies. U.S.insurance regulation system has some obvious characters. Firstly, strict andstandardized state regulation system is the main body of the U.S. insuranceregulations. Secondly, the moderate expansion of the federal regulatory system isbecoming the main features in recent years. Finally, the perfect mixed operationregulatory norms are an important foundation to ensure the stable development ofthe U.S. insurance market.The law of insurance supervision and the law of insurance contract are the basicframework of the regulation system of Germany; they both have a history of morethan a hundred years. With the deepening of the EU insurance market incorporating,the two laws have made many adjustments. The modifications in existing laws areabout the recommendations and instructions of the insurer, the insured’s obligation toinform and responsibilities, as well as the rights of the insured in original insurancemarket. German insurance regulation system has some features of a sound legalsystem, many levels of the regulatory system and regulatory framework foremergency adjustment timely. Because of these features, the German insuranceindustry has shown a steady growth in the financial crisis in2008and the European debt crisis in2010. The performance of German insurance industry is in the leadingposition of the world.The evolution of the Japaneseinsurance regulatory system is also divided intothree stages: from the World War II to the1980s, the traditional model of regulationstages; from the mid-1980s to the late1990s, the reform regulation stages; from thelate1990s to nowadays, stable regulation stage. Japanese insurance regulatorysystem involves regulators, Solvency, premium rates, the use of insurance funds, andprotection of the fund system, information protection system, scope of business,marketing and foreign insurance companies.The features of Japanese insuranceregulation are as follows: retentively mature regulation system, strict management toagency, strengthen the internal management, improving the insurance marketaccording to the market, and comply with international insurance regulationstandards.There are some similarities of major developed countries. Such as they all haverelatively more perfect legal system, and established a detailed and comprehensivelaws and regulations; they all established an independent and sound insuranceregulation to control financial risks; they all basically completed the transition tosolvency supervision and mixed regulation. The differences between these countries’insurance regulation are that they have different concept and ideas of regulation anddifferent system of mixed regulation. At the same time, this paper studied thenecessity and rationality of regulatory cooperation from the regulatory principles,effective risk control, regulation, regulatory cooperation and regulatory practices.Inaddition, it is stressed that countries should strengthen macro-prudential supervision,group supervision, regulatory cooperation and coordination of the developmenttrend.The history of Chinese insurance industry is relatively short, and the insuranceregulation system is not mature enough yet. While emphasizing the importance of solvency regulation, it also bound to enhance the competitiveness of the insurancemarket.In order to improve the insurance regulation system, China should start withdeveloping the goals of regulation, and then strengthen insurance supervision legalsystem, turn to solvency regulation gradually. We should also prevent mixedoperation risks actively and establish an information disclosure system, so thatChinese insurance market could develop healthily.