Research On Surety Reinsurance Transactions Based On Smart Contract

Nowadays,lack of risk diversification and transfer mechanisms,inadequate regulatory systems,and unclear regulatory bodies,to a certain extent,restricts the healthy,continuous,standardized development of the Chinese surety bonding industry.This paper innovatively proposes building a construction surety reinsurance platform with surety reinsurance transaction function and the governance function of the construction surety market by drawing on the related principles of surety reinsurance,the idea of social co-governance and best practice of the Federal Reserve System for supervising the U.S.economy and financial system.In order to fully understand the market demand,a targeted questionnaire survey is conducted for the heads of all 22 guarantee companies engaged in surety bonding business in Shenzhen.Based on the survey results,this paper initially states that a construction surety reinsurance platform should be operated under the low-profit mode with public interests.Moreover,its governance mode,capital structure and functional orientation are further determined.Subsequently,the expert meeting method is used to verify that the surety reinsurance platform can effectively supervise and regulate the construction surety market through its novel functional design.And the mathematical modeling and numerical analysis are used to study the feasibility of its low-profit mode.In order to achieve surety reinsurance transactions with high-efficiency,high-confidence and low-risk,this paper analyzes the relevance of surety reinsurance and smart contract from 4 dimensions including efficiency,trust,security,and innovation,and builds a consortium blockchain based on the surety reinsurance platform.The application of blockchain-based smart contract technology to the surety reinsurance transactions can improve business operation efficiency,reduce information asymmetry between parties,and enhance the security of transaction data,etc.,to further build an efficient,high-security,decentralized and distributed trading platform.Based on this,this paper studies the two core contents of surety reinsurance transactions,namely surety reinsurance transaction and surety reinsurance performance.In the study of surety reinsurance transaction,this paper introduces the auction mechanism to carry out the reinsurance operation drawing on the reinsurance business processes,the characteristics of surety bonding practices and the research of online multi-attribute reverse auction.Then,the surety reinsurance game model based on multi-attribute reverse auction is established,moreover its Bayesian Nash equilibrium strategy is further analyzed.Its three bidding attributes for candidate reinsurer includes total reinsurance expense,underwriting risk and credit rating from the credit reporting system.In addition,this paper uses the Monte Carlo simulation method to simulate the proposed model,and analyze the trend of the total score and sub-attribute scores of the winning bidder under the different bidders' numbers.Based on the above model,this paper presents the bidding rules,trading mechanism and steps for surety reinsurance bidding,proposes a smart contract-based design proposal for surety reinsurance auction and preliminarily presents the "Standardized Electronic Surety Reinsurance Contract" applicable to the surety reinsurance auction to make up for the gap in the auction mechanism for the international surety bonding field.In the study of surety reinsurance performance,this paper further proposes a design proposal for smart contract-based surety reinsurace automatic performance and contract renewal process.In the future,based on blockchain-based smart contract technology,a decentralized and detrusted surety reinsurace ecosystem with high transaction efficiency and high data security will be constructed.