Study Of China's Financial Subsidy For Agricultural Insurance

Agricultural production is faced with serious operational risk, especially the frequent occurrence of natural disasters seriously threatens stable growth of agriculture and peasants' income. Agricultural insurance, as an important economic compensation system, is an effective risk management tool for agriculture. In recent years, China's agricultural insurance market grew slowly, which isn't in consistent with the emphasis of agricultural development in China and does not suit the increasingly fierce competition in the international market of agricultural products.The status quo of agricultural insurance in our country is caused by many factors, one of which is the insufficient financial support from government. The nature of agricultural insurance determines that it must be treated as policy insurance, which cannot be provided by commercial insurance companies. Policy support from government, especially its financial subsidy is essential to its smooth development. This can be proved by the successful operation of agricultural insurance in western countries. Fortunately, with the pilot operation of agricultural insurance in various areas of China, more importance has been attached to financial subsidy by governments at all levels. In 2007, the central government spent, for the first time, 2.15 billion yuan subsidizing agricultural insurance, which contributed to its dramatic growth that year. However, the concrete thought of financial subsidy does not take shape in China. In this context, it is significant to explore the effective ways of financial subsidy of agricultural insurance, by drawing lessons from foreign experience.The dissertation is divided into the following five parts:Part One starts from the opinion that agricultural insurance is an important risk management tool. Then it describes the development circumstance of agricultural insurance in our country and analyzes reasons that caused its slow growth in respect of farmer, insurance company and government. Also it analyzes the important functions of agricultural insurance to the society.Part Two analyzes the financial subsidy for agricultural insurance by mean means of micro-economic theories. It points out its character of weak insurable risk and quasi-public goods. Then, it further demonstrates the important role of financial subsidy plays in the growth of agricultural insurance.Part Three designs China's agricultural insurance business framework, with reference to the experiences and lessons of foreign financial subsidies for agricultural insurance, to determine the target of financial subsidies and its specific methods and standards and explore specific ideas of financial subsidies of agricultural insurance in China.Part Four roughly estimates the amount of the fund required by financial subsidies for agricultural insurance in China and analyzes the possible sources of funds to testify the financial feasibility of financial subsidy.Part Five concludes previous analysis and gives relevant policy recommendations, including financial subsidy of agricultural insurance system, decentralized mechanism for catastrophic risk, as well as supporting policies.