A Study On Deregulation Of Insurance Rate

The first question to answer while studying deregulation of insurance. rate is why to regulate insurance rate. The public interest theory, interest group theory, politician theory, conflict decrease theory and the delegation hypothesis of insurance rate regulation are the theory background of insurance rate regulation. Whereas, from the perspective of insurance rate regulation practice both domestic and abroad, the real intention of insurance rate regulation is to prevent fierce rate competition, which is a form of market failure, from affecting the safety of insurance operation. So, the public interest theory of insurance rate regulation is consistent with its practice. But , protecting interest of the public is only a pretext, it is the insurance enterprise whose interest has really got protected. With the transfer of market structure toward competing market, the real interest of insurance enterprises lie in deregulation of insurance rate, so does the insurance consumers.As far as the now performing reform of rate regulation is concerned, there exist a few confusing concepts such as the market-oriented reform of insurance rate, the liberalization of insurance rate and deregulation of insurance rate. In fact, the market-oriented reform of insurance rate, which is the hotspot both in the theoretical and operational field, is only the transfer of insurance rate maker from the state to insurance enterprises. The set insurance rate must be approved before being put into use, and this belongs to strict insurance rate regulation form. So whether the market can function and to what extent it can function are mostly determined by how the regulatory institution perform the prior-approval. Without considering regulation practice of the regulatory institution to emphasize the importance of market is meaningless. The concept of "deregulation of insurance rate" can embody more clearly the real intention of insurance rate system reform than the concept of "market-oriented reform of insurance rate". Insurance rate liberalization claims no regulation of insurance rate at all, is the utterly unfastening of rate regulation and the ultimate model of insurance rate regulation.Insurance rate deregulation needs its own theory foundation. Economic liberal thoughts claim liberal market competition and are against the state's intervening,which are the direct theory weapon; finance restrain-finance deepen and finance liberalization theory holds that it is the government's finance regulation that results in the restrain of economic development, so deregulation, finance deepen and liberalization should be carried out. The theory of institution flux thinks insurance rate deregulation as a process of institution flux. The transition economic theory of China bases itself upon the reality of China's economic shunt, and enables itself to direct the regulation system of insurance rate towards the unfasten form.Besides the guidance of theory, present environment also acts as a base. The integration of world economy, finance globalization and liberalization trend is intensified; after entering WTO, insurance enterprises should operate according to and meet world insurance traditions; the interest rate's market-oriented reform has gone ahead steadily, the interest rate base in insurance rate making has lost; socialism market economy system reform has achieved a lot, many elements markets have completed market-oriented reform. All of the above compose the exterior environment of deregulation of insurance rate. On the other side, the situation of more and more insurance enterprises, the more fierce market competition and insurance system reform is facing the key phrase, which need the help of market to upgrade the whole industry and carry out structure adjusting. All of the above compose the interior environment of deregulation of insurance rate.Moreover, the SCP model (market structure-enterprise conduct-market performance model) is also persuasive in explaining deregulation of insurance rate. As far as the market structure of China's insu...