Risk And Insurance: Reconsidering The Rationale Of Institution Of The Insurance Law

In the real world, the risk is an objective phenomenon; the uncertainty of all kinds of loss in life is risk. Due to the existence of the risk, when loss occurs, it causes irreparable negative impact to the people.Whether because of the nature of drawing on advantages and avoiding disadvantages, or because of the theory of the maximization of social wealth, we should manage and control the risk effectively. Insurance came into being based on this kind of demand, and from the date of its formation it began to manage and control the social risks with the law of large numbers. Today insurance has been essential to ensure the normal operation of the social system. Through long development insurance has formed a set of functions with economic compensation, financing function and social management function. Institution of the insurance law ensures the insurance managing and controlling the risk of the society in the running of the insurance through regulation and guidance. At the same time institution of the insurance law has been equally given an important mission--to manage and control social risk. This paper considers that insurance come form the view of people to manage and control the risk of the world. The evolution from the risks to the insurance illustrates that the fundamental purpose of the insurance system is to manage and control the risk. Now the various theories of risk management and control show that risk is controllable and administrable from the other side. So institution of the insurance law, as a rule to govern the running of the insurance, should be designed and operated based on the basic mission, and to manage and control the social risk should be their ultimate goal. And it should be used as a standard to improve the existing institution of the insurance law. Based on this viewpoint, this paper empirically analyses institution's function of managing and controlling social risk with comprehensive legal economics and legal sociology and many other theories. And through the typical cases, this paper examined the current Chinese institution of insurance law's efforts as well as shortcomings in managing and controlling the social risk. Thereby we could provide a direction in improving and operating institution of the insurance law. According to the paper, institution of the insurance law, both in the designing and in the operating should follow the principles of managing and controlling the risk with the view to control the social risk farthest. Institution of the insurance law should be reasonably designed and operated efficiently to achieve an effective means of risk control. Based on this theme, the article was divided into three parts:The first part: the risk and insurance. Institution of the insurance law is on the premise of the insurance mechanism, so we can't skip the insurance mechanism when we discuss the rationale of institution of the insurance law.First, this part reconsiders the concept of risk itself. Although this concept was used very frequently in our lives, it is hard to truly understand the meaning of this concept so we have to check the different interpretations of different scholars in different disciplines. This paper mainly examined the concepts of risk in the economics and insurance. In the comparison of the two concepts, we use the concept of insurance as a basis of this paper. Then this paper put the insurance in the history to demonstrate the origins of insurance--from risk to the insurance and the role of insurance in the management of the risk. In this paper, then I examined the function of the insurance both horizontally and vertically and ultimately concluded that modern society has a set of functions of economic compensation, financing function and social management function as an integrated function mechanism. This is basic work for the discussing later in this paper. Because institution of the insurance law manages and controls the risk mainly though acting on the insurance's various functions to realize the goal of risk control. In the end of this part, this paper placed the insurance in the background of the times, and with the introduction of Beck's theory of risk society, discussed the contemporary challenges faced by the insurance, which highlights the important role of insurance and the important mission of institution of the insurance law.The second part: institution of the insurance law in the process of risk management. In this part, we firstly discussed the possibility of risk management, and demonstrated that the risk was manageable drawing on some of the existing risk management theory. Insurance is one of the most important methods of risk management. Institution of the insurance law will also be an important method of risk management and control. Then was the focus of this part—institution of the insurance law as a risk management method. In this section, we first made the function of the institution of insurance in risk management and control through the analysis of a typical practical problem. If institution of law was not designed and operated well, it would cause negative results .So the beginning of institution of the insurance law should be based on risk management and control. And institution of the insurance law exited as a method of risk management and control and the goal of risk management and control must be realized through a certain way. This paper argues that institution of the insurance mainly realize the goal of risk management and control by acting on the functions of insurance. The functions of insurance have been told earlier, so here we discuss the method of risk management separately through the three functions of insurance. Institution of the insurance law respectively governs and guides economic compensation function, financing function and social management function to realize the goal of managing and controlling risks. Subsequently, this paper discussed the controversy over motor vehicle third-party liability compulsory insurance, in which we analyzed the efficient operation of the law from both positive and negative aspect. We made it clear that institution of the insurance law should be designed and operated for the purpose of risk management and controlling, otherwise the law will not be operated efficiently.The third part: thinking of the improvement of the institution of the insurance law in China. This part turns the paper from the discussion of the theory to the practice guiding, and tells the practical significance of the point of view of this paper. First, we start with the development and disadvantages of China's insurance industry and institution of the insurance law, then examined the realization historically and empirically. It can be seen that our insurance industry and institution of the insurance law started late and was built up through legal transplants. So there are still quite a lot of problems and do not play well in the function of risk management and control. Then this paper gives some advices to the existing institution of the law from three aspects of the legislation, application of law and insurance supervision. In legislation we should consider the future impact of the law and give full consideration of the institution's role of risk management and control, thereby determine how to design institution of law. The process of application of the law should also be closely linked to the theme of risk management and control and guide people's behaviors through incentives rather than force. Insurance supervision should be based on risk management function. And we should make the insurance supervision model fit to the needs of the times and change from strict control model to lax control model.In the end of this paper was the conclusion part. This part made further generalization of the preceding sections, and concluded that with the continuous improvement of the functions of insurance plays a more and more important role in the society in risk management and control. Institution of the insurance law had its fundamental function--manage and control the risk of the society by acting on the three functions of the insurance, and this is the realization of the function of the insurance law. By discussing the realization of the function of the insurance law, we can conclude that institution of the insurance law whether when institution of the law was designed or when the institution of the law was operated or when in the insurance supervision, should be based on risk management and control function so as to achieve the goal of efficient operation.