Research On Legal Regulation System On Solvency Of The Insurance Company

The legal regulation on solvency of the insurance company is the regulation on some key factors which are related with solvency such as the asset, debt and risk according to the statutes of insurance by administrative department. This paper discusses on this subject from six aspects.The first aspect is about the basic economic theory of the regulation on solvency. Because the insurance is essentially an economic phenomenon, and the regulation on solvency of the insurance company is also the demand of economy, this paper first introduces the concept and the levels of solvency regulation from economic aspect. Then the paper analyses the need for the establishment of this system. By comparing the trends abroad and the situation domestic, China should attach importance to both of solvency and market conduct regulation, not blindly follow the trends of developed countries in the world. We should turn to the regulation system in which the solvency regulation is the only core step by step.The second aspect is about the legal significance of the regulation on solvency of the insurance company. In this field, the state can use the means of law, economy and administration; the latter two seem to be the main means of the government. But the market economy is an economy ruled by law, and law is the best means to guide the economy. Sometimes even economic means and administrative means are used, they must be stipulated and ensured by legal means. All other means will convert to legal means ultimately. In substantive law, the legal means represents the values of order, fairness and effectiveness. In procedural law, the legal means can lead to a series of responsibilities including the contract responsibility and the administrative responsibility.The third aspect is about the content of the legal regulation on solvency, which is solvency in fact. Solvency means the ability of the insurance company for the economic compensation to the insurance responsibility, which is divided into minimum solvency, actual and statutory solvency. The main content of solvency includes the capital, the earnest money, the capital reserve of responsibility, the common reserve funds, the insurance policy coverage fund, the minimum margin of solvency and so on.The fourth aspect is about the legal supervisor. From an economic standpoint, the solvency supervisor can be divided into three main levels: macro, meso and micro. Macro-level supervisor is the government, the meso-level supervisor is the self-regulatory associations, and the micro-level supervisor is the insurance company itself. But from the legal point of view, the legal supervisor must be authorized by law according to the statutes strictly, so meso and micro-level supervisors can not be legal supervisors. Currently, Insurance Regulatory Commission is the legal supervisor of solvency authorized by "Insurance Law". However, some of the self-regulatory association's regulating behaviors in the continuing process already have quasi-legislative and quasi-law enforcement functions, this paper tries to put it into this section to discuss.The fifth aspect is about the object of the legal regulation, namely the insurance company. First, measures must be taken to perfect the organization form by the way of legislation. Currently, Ltd. and state-owned companies are the only forms which brought about various problems that directly affected the solvency. Therefore, China should diversify the forms of the insurance. Second, the insurance company's internal control should be strengthened. Insurance company should enhance their awareness to operate in compliance with the law. Based on the insurance business conditions both in the external environment and internal funds, the insurance company should focus on the management and effective control over solvency targets.The sixth aspect is about the mode of legal regulation. This is crucial for connecting with other factors in the legal relationship such as the content, subject and object. In light of China's actual situation and the relevant experiences of other countries, this paper proposes a three-step approach which should be taken towards the establishment of a mature regulatory system on solvency. The short-term objective is to establish a basic static regulatory system which means perfecting the margin of solvency and early warning system. The medium-term goal is to establish a mature static regulatory system and fetch in the RBC system from the U.S., which associates the asset and risk together. The long-term goal is to establish a dynamic regulatory system, which is the most advanced approach now being used in many developed countries. It is more scientific in prediction of solvency, so it can provide a more accurate way for supervision.