The Establishment Of Mechanisms For Catastrophic Risk Management In China

With the economic and social development and population density, concentration of wealth increases. Catastrophe losses and the frequency have been increased. Early in the catastrophe was caused by natural disasters, today, the terrorism, the satellite launch failure, nuclear power plant accident, and such as the outbreak of atypical pneumonia has become the source of the risk of catastrophic risk. Catastrophic risk his sudden and devastating impact on the world economy.Catastrophe in China major contains natural disasters, such as earthquakes and floods. Every year due to natural disasters and major accidents resulted in economic losses amounting to tens of billions of dollars. The past decade, the floods have become the No. 1 catastrophic in China, the floods in 1998 led to a loss of over 200 billion Yuan. Last year, the losses caused by floods in the Huaihe River, has reached over 100 million. Now the major catastrophe management mechanism is the State disaster relief; advance prevention, mitigation weak; and catastrophic insurance coverage narrower, which making catastrophic losses almost entirely on the state subsidies or social contributions. Many reasons why China needs to build up the catastrophic risk management mechanism.The purpose of this paper is to discuss how to establish our catastrophe risk management mechanism; the full text is divided into three parts:The first part: the impact of the catastrophic risk and management status:First, The meaning of the catastrophic risk: the risks that in the future are likely to refer to human and social wealth caused great losses of lives and safety. This definition highlights the characteristics that enormous damage caused by the catastrophic risk. Also on the basis of the definition, the author descriptors catastrophic risk of the types and characteristics, according to different standards put into catastrophic risk: the risk of natural disasters and man-made disasters or normal risk of catastrophic risk and polymorphism catastrophic risk, put the catastrophic risk characteristics summarized as follows: huge losses; low frequency losses; forecast for difficulties and difficult to spread risk.Second, it cited the large amount of data to elaborate the impact of catastrophic risks. In this part, the author shows that the direct and indirect impact of the catastrophic risk to the community also shows the impact of the catastrophic risk to the insurance company.Finally, the analysis focused on the ways and status of catastrophic risk management. When analysis the catastrophic risk management approaches, mainly in the form of text and graphics responsible for the nine ways to deal with loss; when analysis of catastrophic risk management in the current situation, mainly through comparing the catastrophe risk management between developed and developing countries to illustrate the status of catastrophic risk management. Meanwhile illustrate the main problems in our catastrophe risk management; Construction of the third describes the stage for catastrophe risk management mechanism.The second part: an effective catastrophe risk management mechanism in developed country——the government's cooperation with the market(the United States, for example)The limitations of relying on government or market to manage the catastrophe risk. Include:1,Traditional insurance / reinsurance market to deal with catastrophic risk of a dilemma : (1) Confronted with catastrophic risk, traditional reinsurance products and methods exposed the obvious flaws. (2) Catastrophe brings big blow to the reinsurance ability of reinsurance companies. (3) Due to the fear of catastrophic risk for insurance products will be further constrained supply.2,Catastrophic risk securitization deal with catastrophic risk of a dilemma : (1) Insurance costs are too high to issue securities products (2) mobility is not high.3,Relying on the government's limitations : (1) After Features of government compensation mechanism (2) the efficiency of the compensation mechanism. (3) The government is facing a "super-catastrophe" embarrassment.Secondly, from the perspective of relationship between an expanded definition of insurability risk, the effectiveness of catastrophic market, Catastrophe risk-sharing and government intervention to analysis the reasons of government intervention catastrophe market.Third, the analysis of the specific measures that government intervention in the market catastrophic. Include:1,Relief from the government. In this regard, the government generally can adopt two measures: (1) to use the law to control the risk regional units of catastrophic areas, for example, prohibit new construction in certain high-risk areas ; (2) to reduce post-disaster relief and public education.2,Risk reduction. Many measures to reduce risks, mainly: (1) The management and regulation of land use; (2) Standards for new building construction; (3) Strengthening and improving the building already, and so on.3,Tax policy. The tax system in different countries is not the same, but not many policies to encourage measures to reduce the risk and catastrophic insurance; To encourage private to purchase insurance and take the risk reduction measures, the government should at least take a neutral tax policy; In addition, The catastrophe reserves for insurance companies and the government should take tax-free investment application.4,Public insurance.5,The regulation for private Catastrophic insurance market. The right measures include: the right to change the regulatory restrictions rates into rates of record; to allow insurance companies to choose risk to avoid the risks are too concentrated and regulatory departments should strictly monitor the solvency of insurance companies against catastrophic risk.6,Public information and public education.7,Banks (and other lending institutions) regulation .Fourth, the analysis of catastrophic risk management mechanism which can learn from developed countries includes:1,Orientation government's role2,Pay attention to cultivating the public awareness of the catastrophic insurance and catastrophic risk3,Development and improvement the capital market4,Technologies related to catastrophic risk5,Construction of relevant legal system The third part: The idea of establishing a catastrophic risk management mechanism in chinaFirst, the analysis of general concept of establishment of catastrophic risk management mechanism in china .Includes:1,The creation of China's catastrophe insurance system of integrated, multi-level, sponsored by insurance companies, supported by the government, and sustainable development. After introduction several terms of "integration" and "multi-level", "sponsored by insurance companies, supported by the government "and" sustainable development ", on the following measures: (1) from the scope of protection and Participation to achieve the maximum degree of risk (2) The same with underwriting targets, underwriting general liability and property insurance basically2,the implementation of different premium rate. In this paper pointed out that due to the various types of natural disasters and the degree of variation, we must be based on specific circumstance to use different premium rates, especially in poverty-stricken areas should give premium relief or subsidies3,Tax concessions. Catastrophic insurance reserve should be provided preferential taxation policies.4,Encourage mitigation measures. Focus on two areas: (1) to encourage local governments to disaster reduction (2) encourage individuals to disaster reduction5,the supervision to catastrophic insurance market. The analysis pointed out the insurance regulatory authorities in both demand and supply aspects of the catastrophic insurance market.Secondly, the specific recommendations of establishing a catastrophic risk management mechanism for china -- for example, flood insurance1,The principle of construction of flood insurance. Including: Operational costs and sources of funding for local economic conditions; Organization suited to the local political organization and custom backgrounds; the principle of flexibility; to reduce costs and improve the operating efficiency of flood insurance and gradual mechanism design.2,The business entities of the flood insurance mechanism in china–insurance company. This part introduces the things that insurance company should do. Including: Sales of flood insurance; public companies with estimated claims; improve their operations from flood insurance operation experience from abroad and gradually improve their operations in securities.3,Flood insurance aid -- government support. This part introduces the responsibility of government should assume. Include: the establishment of the specialized agencies to manage flood insurance; flood insurance laws and regulations; flood risk map; publicity and education of flood mitigation measures; and disaster relief.4,Cooperation with the insurance companies and government. The analysis of how the government and insurance companies cooperate.The innovation: First, on the topic, this paper has chosen the mechanism of catastrophic risk management, not just focused on the catastrophic insurance or management, the paper makes its novelty; Second, the research perspective, the difference lies in this and other articles is it focusing on mechanism of catastrophe risk management rather than the establishment of a for the catastrophic insurance system, stressed importance of combining government and the market. Third, this is not just a general analysis of how to build a catastrophic risk management mechanism, but also as an example to flood insurance. The author introduces the specific recommendations of the catastrophic risk management mechanism to establish.Of course, due to the limited nature of the information, the lack of knowledge, the paper has many inadequacies. The author wants the teachers and students to identify shortcomings, so that I have more room for improvement.