Research On System Of Agricultural Insurance (AI) In Jiangsu Province

It is well known that Agriculture is relatively weak industry with low profitability and high risk. Especially after China entered the WTO, Chinese agriculture started to face the double risk: nature and market. Agricultural insurance system is considered as not only the significant part of rural security mechanism but also one of the most important non-price agricultural protection tools in the world. Now there are more than 40 countries applying or testing the agricultural insurance policy which is also one of the Green Box Policy with the approval of WTO to help the development of agriculture. Agricultural insurance market seems to be huge, nevertheless, high compensation rate and high risk become the obstacle for commercial insurance companies and make them give up the market. The development of agricultural insurance in China is stagnant. As an epitome of the whole China, Jiangsu Province has similar characters, such as very low coverage rate and supply. A couple of economists conclude that agricultural insurance has dropped into a dangerous situation of market failure with little supply and little demand. In order to stabilize the agricultural production, improve the income of farmers, and realize the"Two Leading Developments"as soon as possible, it has theoretical and realistic significance to do some research on the causes of market failure for agricultural insurance and attempt to reconstruct agricultural insurance system in Jiangsu Province.This article takes several different theories and methods, e.g Public Product Theories, Economics of Welfare, Positivist Analysis and Game Theory, to analyze how to use agricultural insurance policy to deal with market failure, locate the role of government in the development of agricultural insurance, and research the indispensable security function of public financial subsidy for agricultural policy insurance. The article also plans to analyze the interaction from the government, insurance corporations, and farmers. It also tries to provide the government with a bunch of suggestions on improving agricultural insurance. The final targets include : (1)explore the effective operational mode of agricultural insurance in jiangsu Province, (2) help the government to find out the effective ways to solve the market failure, (3) search for the exact reasons why the customers in the agricultural insurance market, farmers, lack the demand, (4) think over the new policies and decision-making suggestions for the government of Jiangsu Province to solve the problems about"three dimensional rural issues"(Agriculture, Rural Areas and Peasants) by the way of agricultural insurance system.