Study On Catastrophe Risk Securitization And Its Application In China

In the 1990s,some western developed countries effectivly enhanced the underwriting capacity and the risk-resisting capability of the insurance industry through the issuing of catastrophe risk securitization products to face the loss from the catastrophe risk.China is of the countries which suffer from catastrophe.Although the channels is narrow in avoiding catastrophe risk,which is adverse to the main post-disaster reconstruction and relief work and the sustainable development of China's economy.Therefore,it is important to our country to introduce learn from the successful experience of Western developed countries and introduce catastrophe risk securitization so as to transfer and reduce losses.This paper attempts to analyze the reinsurance,the traditional way of risk transfer for catastrophe risks,and its defects of probably falling into difficulty under risk expansion.Thus the catastrophe risk securitization comes into being,which offers a new solution to the problem of risk transfer and reduction.On the basis of the fundamental theoretic analysis and research into main catastrophic securitization products on the current international market,the author proves that catastrophic securitization is the most mature and most widely applied products.And with such an example, this paper attempts to give a definition for finance studies under the currency flow methodology. An introduction to the USAA hurricane securities and its issuing procedure is also made to offer reference to the development of catastrophic securitization in China.It comes to the conclusion that the basic conditions for issuing of catastrophic securitization is already there in China.Along with an in-depth analysis for its necessity and feasibility,this paper also identifies the restraint elements for its development.Therefore,we should establish and improve the market demand and supply system,develop the suitable catastrophic risk management model and risk index system fitting Chinese conditions,set up the credit rating system to attract investment,build the system guarantee mechanism,and last but not the least, issue short term catastrophic bonds before the all-round development of catastrophic risk securitization.