A Research On The Credit Insurance And Legal Application

Credit insurance is a well-developed credit media in mature market economies. However, in China, credit insurance, which originates from export and is expanding its coverage to internal commerce, lacks clear-cut legal norm and has hence resulted in frequent contract disputes. As a tool to protect creditor's rights, credit insurance has its particular characteristics different from ordinary property insurance, and there is apparent deficiency in the legal norm of credit insurance with the existing Insurance Law and its supervisory system. The determination of applicable law concerning credit insurance has become an issue which needs to be solved with more and more urgency with the fast development of credit insurance, and the slow pace at legislative and judicial sectors will restrict the practice of credit insurance. Through two case studies on law application, this article introduces the theory, practice, characteristics and applicable laws of credit insurance. The article intends to find the deficiencies in law application of credit insurance by methods in the form of comparison, summarization and induction, and it will take references from law application in similar fields, and provide suggestions on the improvement of law regulation and supervision concerning credit insurance.The article, except the introduction, has six sections and about 25,000 words. The main contents of the sections are as follows:1. Section 1 gives two case studies. Case study one is about an insurance dispute on the quality of goods between an insurant and a credit insurance company. In the arbitration, the stipulation of quality dispute being first dealt with before compensation being determined in the credit insurance contract has been supported, and this shows the attributes of creditor's rights and safeguarding principles of the object of credit insurance. Case study two is a trade financing dispute on reparations between a bank and an insurance company. The law court rejects the bank's demand for reparation on the basis that the bank is not an insurant. This case shows the good faith principle and the concept of postposition of accident investigation in credit insurance, and also reflects the conceptual difference between credit insurance and financing insurance. These two case studies lead to the discussions on the law application issues of credit insurance.2. Section 2 discusses the background of origination and development of credit insurance through analysing the relations of credit and debt. By studying the fundamental theory of credit insurance, the section shows the special characteristics of credit insurance different from ordinary property insurance.3.Section 3 tries to give a clear account of the credit insurance practice by introducing the basic business process, relevant party and credit insurance contract of credit insurance by the means of categorization of the relatively mature credit insurance services in China. At the same time,gives a description of the three modes of cooperation between the insurance and banking system, analysing the legal difference of them, in order to draw lessons for financial and judicial practices. It also carries out a comparison study on the stipulations of the Insurance Law and the concepts, conventions, and practices of credit insurance, in order to show the deficiencies of application of the Insurance Law in credit insurance practices.4. Based on the generality of causes and countermeasures of risk, Section 4 elaborates the theoretical differences between credit insurance and guarantee, and explains that in the common law countries credit insurance is regarded same as guarantee. It supports the idea that credit insurance and guarantee can take reference from each other in law application and points out several areas in the Guarantee Law from where the law application of credit insurance can take for reference.5. Section 5 offers a summary of the present situation and growing trend of the credit insurance market of China, and puts forward policy recommendations for the betterment of the law and supervision system concerning credit insurance of China in the purpose of addressing the serious deficiency in lawmaking area.