Study Of Foreign Insurance Business Regulatory Legal System

Insurance is called the stabilizer of societies, so its supervision is very important and necessary for every country. Especially in the era of economic globalization , the supervision of foreign insurance is very important. For China, the insurance market has opened all round after the period of transition of WTO. How to take the operation supervision of the foreign insurance companies which have already crossed the threshold of market access is the problem which is faced and needed to be solved by Chinese insurance. This essay uses the methods of comparative study and documents study. By comparing the involved system of UK and USA, we could get some advanced experience deserving us to learn. And then, this essay analyses the legislation situation of China, puts forward the necessity of improving the foreign insurance operation supervision legal system of China, and offers some advices. The main contents are as follows:Part I: First, this essay defines the concepts as insurance, foreign insurance, supervision, financial supervision, insurance supervision and insurance operation supervision, and shows the necessities of insurance supervision and insurance operation supervision. Then, this essay introduces that financial supervision includes market access supervision, operation supervision and market withdrawal supervision. Because foreign insurance supervision is a part of financial supervision, it could also be divided into foreign insurance market access supervision, foreign insurance operation supervision and foreign insurance market withdrawal supervision. The foreign operation supervision is consisted of market behavior supervision, information disclosure supervision and solvency supervision. The operation supervision is the continuous supervision for foreign insurance, and it is a main way to regulate insurance market and control the risks. It plays an very vital role in the whole supervision system. The targets of foreign insurance operation supervision are to ensure the safe operation of foreign insurance, protect the rights and interests of policy holders, guarantee the efficient run of insurance system and the good operation and stable development of insurance market competition mechanism. The principles of foreign insurance operation supervision are almost the same as the foreign insurance's. The theoretical bases of foreign insurance operation supervision are the market failure of insurance, the government failure of insurance, as well as the analysis of supervision's cost and income. All the theories show the necessity of the foreign insurance supervision.Part II: To discuss foreign insurance operation supervision legal system of China deeply, it is needed to know about the regulations of UK and USA for the system. And we could get some reference and experience from these two developed countries. By comparing and analyzing the legislation, supervision authorities, legislative modes and contents of UK and USA on foreign insurance supervision, we can tell that UK takes the unified legislation mode, while USA takes the combined legislation mode which unified legislation dominates. The contents of these two countries both include market behavior supervision, information disclosure supervision and solvency supervision. At present, the strict regulations for insurance market are cancelled gradually, especially the regulation for market behavior, which manifests as the liberalization of insurance contracts and the marketizaiton of premium rate. The insurance supervision pays more and more attention on solvency supervision, while the establishment of the information disclosure system is receiving more and more concern day by day. In general, the supervision of market behavior is relaxing gradually, solvency supervision is becoming the core of supervision, and the information disclosure mechanism is developing better. All above are not only the development course of UK and USA, but also the development direction of every country in the world. China could take them as references as well.Part III: The agreements in WTO related to insurance are General Agreement on Trade in Services(GATS) and Agreement on Financial Services. The principles of the two agreements are most-favoured-nation treatment, transparency, increasing participation of developing countries, and liberalization, and so on. In the Accession Protocol to WTO, the insurances China promises are life insurance, health insurance, pensions/ annuity, non-life insurance, reinsurance and insurance auxiliary service, and makes certain pledge on the market access limit and the national treatment limit. Chinese insurance supervision mechanism started from the beginning of 1980^th, when there was totally blank in foreign insurance supervision field. In 1992, AIA entered China as the first foreign insurance company opening the prelude of foreign insurance supervision legislation of China. Subsequently, China promulgated a series of laws and regulations, upgrading and improving the legal system of foreign insurance supervision gradually. Looking from the main contents of the legislation, foreign insurance operation supervision also includes market behavior supervision, information disclosure supervision and solvency supervision. And the market behavior supervision includes the insurance clause and premium rate supervision, financial supervision and funds application supervision; information disclosure supervision include financial information disclosure supervision, great situation in operation disclosure supervision, and information disclosure supervision when foreign insurance companies doing reinsurance business with affiliated enterprises; solvency supervision includes minimum solvency margin and practical solvency margin.Part IV: Although the foreign insurance operation supervision legal system of China has had considerable progress, it still has plenty of shortcomings and defects, including the shortcoming of legislative mode and legal system, the fuzzy of the scale of operation supervision and inadequate of supervision transparency. Entering WTO brings China a lot of challenges as well as opportunities. Improving the foreign insurance operation supervision legal system is much more important after the entering of WTO. To improve the system, combing to the experience of UK and USA, this essay advises as follows: about choosing the legislative mode and legal system, to gradually transit to the unified legislative mode, integrate the legislation at present, and advance the legislative level; to make clear that foreign insurance operation supervision include market behavior supervision, information disclosure supervision and solvency supervision, and make the solvency supervision the key point; to advance the foreign insurance operation supervision transparency, and keep consistent of the international agreements' require as possible.