Research On Operation Cost Of Cooperative And Mutual Fishery Insurance System

Fishery production plays a significant role in the sector of agriculture in China, with high risk and insufficient insurance simultaneously. Whereas cooperative and mutual insurance, being the non-beneficial insurance founded by non-governmental organizations, could effectively solve the problems of adverse selection and moral hazard and thus decrease the cost of risk management, which has been the main insurance pilot project encouraged and supported by the central government in recent years. Fishery Mutual Insurance Association in A province was first founded in December of 2004, providing three insurance categories:employer's liability insurance, medical insurance and hull insurance. In spite of its coverage of over 100 thousand fishermen, A cooperative and mutual insurance is still suffering from relatively high operation costs, compared to commercial insurance, and a large amount of foundation surplus.In this thesis, A cooperative and mutual fishery insurance was compared with commercial insurance in terms of operation costs which was divided into two elements:risk cost and management cost, represented by pure premium rate and additional premium rate respectively. Furthermore the non-life insurance actuarial science techniques were employed to build up the linear cost calculation models for empirical ratemaking of three insurance categories separately from 2004 to 2008 to find out that the cause to high operation cost is the high management cost. In the following part, the forecast and analysis of the operation cost of A cooperative and mutual insurance were made through policy simulation in consideration of changes in the coverage, the accident rate, the claim amount of each policy and the fluctuation. Lastly to address the high operation cost problem and perfect the fishery cooperative and mutual insurance policy, the suggestions were made:to directly reduce management cost, to expand the scope of coverage and to raise efficiency through perfection of information system.