China's Catastrophe Fund Establishment Conceiving

Since China is a country that has frequent and massive natural calamity, catastrophe risk suffered from the natural environmental development is on the rise. Only in the first half of the year 2008, our country has suffered two widespread damages: freezing rain and snow catastrophes and the Wenchuan Earthquake. The harm could be amplified by the social and economic effects of catastrophe. Such as most Developing countries, China's catastrophe risk management model is mainly allotted by the state aid, including government appropriation, international contribution, social donation and so on. The payment from insurance company is only about 5% of the total damages, well behind the global average of 36 percent. The effect of spreading risks in the insurance market has not yet been brought into full play. Because higher expectation of government relief, individual residents do not take enough precautions against the catastrophe risk in the daily life, which leads to moral hazard and"Charity Hazard".Based on the above mentioned, this thesis proposes China's catastrophe fund establishment conceiving, taking marine catastrophe risk management for example. In the circumstances of insurance and capital market are not full-fledged in our country, the catastrophe fund establishment is suitable to government's leading pattern. The government delegate professional insurance company to open policy-based insurance by grant-in-aid, and the earned premium income constitute capital source of the catastrophe fund along with government appropriation, social donation. The fund operation can refer to relevant regulation of social security fund, making the investment with periodicity of 10years. Meanwhile, the thesis applies factorial analysis and fuzzy evaluation to financing differentiation and setting franchise, taking storm tide for example.The paper is divided into three parts:Part one. The paper summarizes the damaged condition and Characteristic of China's marine disasters, analyze the necessity and feasibility of establishing marine catastrophe fund. It comprehensively expounds the necessity of establishing marine catastrophe fund from three parts-single compensation mechanism, lower compensating standards and random working capital. This paper evaluates the feasibility of the marine catastrophe fund establishing, from market analysis and technical analysis.Part two. The paper introduces three patterns of foreign catastrophe risk fund in terms of governmental efforts to the fund. I t designs the general frame of the marine catastrophe fund, which exemplifies global compensation theory. After that it apply the Markowitz Portfolio Theory in to asset management practice, suggest to definite the optimum asset portfolio and it's return with linear programming method.Part three. Concerning territoriality feature catastrophe risk led to moral hazard and adverse selection, the paper divides the eleven province/ municipality into two payment level giving rational consideration to both efficiency and fair in order to motivate the people to participate in catastrophe fund. The thesis studies the critical point when the catastrophe fund participates in the Catastrophe XL with multi-stage risk fuzzy evaluation method, and then the empirical analysis is given to validate the methodology taking storm surges as example. This method can be used into other catastrophe fund establishment, thereby it will ease the government's financial burden and protects basic rights of every involved parties.