Study On Agricultural Insurance Development In China And Application On Insurance Innovation

Agricultural insurance is a significant risk management tool, which uses the mechanism of risk spreading. It makes a very important role in the stabilization and development of agricultural economy. China is a large agricultural country, which has so much natural disaster. However the agricultural insurance business in China is depauperate and inefficient indicating the supply and demand pattern of agricultural insurance is imbalanced. Our agricultural economy is almost in the shadow of all kinds of risks. This paper is based on the situation of our country, combined with the classical economic theories and practice of different countries to resolve the problem.This paper is divided into five parts. The writing purpose, content as well as innovations and summary of study is interpreted in the preface, which is a guider for the following parts. The first chapter analyses the advantage of agricultural insurance, compared with other risk management tools, which is integrated and more efficient. It means agricultural insurance makes an important role in modern economy. But in China it doesn't work, the shortage of supply is huge. Chapter two analyses the reasons. According to the economic theories, there is market failure in agricultural insurance that doesn't fulfill the required conditions for a risk to be insurable. It includes characteristic of catastrophic risks as well as Asymmetric information having two dimensions, which are adverse selection and moral hazard. In China the problem is more serious and at the same time the lack of effective demand makes the things worse. Chapter three discusses the function of government. Agricultural insurance is the quasi-public goods, which need government intervention. However the nonfeasance of our government is the other reason why the agricultural insurance business in China is depauperate. This chapter focuses on the way of government...