Research On The Moral Hazard Of Automobile Insurance Market In China

Since the reform and opening up, domestic insurance industry gradually restored, the insurance industry has made rapid development, the number of property insurance corporate had increased to 46 until the end of 2008. In the domestic property insurance companies, automobile insurance premium income take up a ratio of 60%-70% in the total premium. Auto insurance is the core insurance of property insurance company, that playing an important role in the business profits and financial solvency. However, behind the brilliant achievements, there are many kinds of problems because of the moral hazard, that leading to a high loss ratio, reducing the profit of the auto insurance business, damaging the financial stability of property insurance company and doing harm to consumer's interests. On the other hand, moral hazard seriously affects the efficiency of the automobile insurance market and reduces public confidence in the insurance industry. This not only raises the concern of the industry and the academia, and caused great importance of the regulatory authorities, it became more and more important to researching the moral hazard in the automobile insurance market, and as a result, the paper chooses moral hazard to research.This paper is divided into five parts. The first section is an introduction, introduction section focuses on the background, the significance of the paper, Research Methods, general framework and literature reviews.The second part is about of Chinese automobile insurance market. As the automobile insurance is a financial service product, its development depends on the development of automobile industry, This section analyzes the general situation of China automotive industry at first, and then analysis the automobile insurance market by using a large number of data and charts.The third part is the analysis of moral hazard in the automobile insurance market, moral hazard is widespread in the automobile insurance market. In this section, we first analysis the main participants of the automobile market, and then research for the reasons of moral hazard, the performance of moral hazard and the harmful of the moral hazard separately.The fourth part is game theory analysis of moral hazard in the automobile insurance market. We construct the game theory model in the condition of Asymmetric information, research the factors that leading to moral hazard.Part five is the policy recommendations. It is multi-level system architecture to prevent moral hazard that including Insurance companies, insurance consumers, industry associations, and national legal system. Based on comprehensive analysis and according to the results of the game theory in the fourth part, this part offer the advice for the development of automobile insurance market and preventing moral hazard in China.