Liability Risk And Liability Insurance

1. IntroductionAlong with the implement of the reform and open-door policy in-depth, people have taken profound cognizance of the importance of constructing a perfect and mature legal system. It has been established as an essential national policy to rule by law because of the need of reforming economic regime. Consequently, while the whole legal system headed by the constitution is gradually becoming complete, the government has been introducing more and more legal and economical measure into the management of enterprises (both public and private ownership). Compared with the planned economy system, the market economy system vouchsafes a more independent legal status to enterprises. One the one hand, enterprises have more rights to act on their owns. On the other hand, they must independently assume more obligations and liabilities, in which the legal liability is the most important component. According to the experience of developed countries, due to the campaign of protecting consumer's rights & interests and the rising demand to person indemnification, the frequent tort indemnity with huge amount dollars seriously affects the existence and development of enterprises. Although in China this problem is still not prominent at present, this tendency is inevitable with the consolidation of legal system construction and the improvement of people's living condition. Furthermore a few analogous examples have come forth among the lawsuits. Hence it is significant for enterprises' standing sound progress to be cognizant of liability risk and take it into account in management. In order to promote the Chinese legal system construction and find a new way to broaden insurance business scale, the domestic insurance companies must pay much attention to exploiting liability policies now, and come into possession of this market before the foreign capital insurance enterprises launch into China.2.StructureThis thesis includes four parts. In part one, it shows that the enterprises in China are going to be confronted with the liability risk through the analysis of the relationship between market economic and 'rule by law' and the change of legal status of the enterprises in China. In part two, it analyses the origin of liability risk on the basis of the Chinese statute. The focal point of this analysis is the civil liability risk existing in the domestic undertakings. In part three, it emphasizes the importance to intensify the management of liability risk in these industries and discusses the way on how to scheme the management in principle. The discussion also accents the unique status of liability insurance in the scheme. In part four, it illuminates the necessity and the pre-requisite to exploit the domestic liability insurance market and the main problems and difficulties in this exploitation. Based on some experience of abroad progress of liability insurance, it also provides some advice to promote this exploitation.3.ContentsPart one: Liability Risk-The Enterprises' Problem Under Market EconomicLiability risk is a possibility of suffering a property loss from an illegal behavior or special statutory cases. In the light of this circumscription, we can see that the liability risk arises from law or statute, so for many years there has existed this risk in those countries which jurisprudence became matured long time ago. Before China's government put the reform and open-door policy into effect, there was no need for the enterprises in China to take liability risk into account. There are two reasons for this phenomenon. (1). All the enterprises were of public ownership and had no independent legal status. (2) Before 1982, there was no real civil code in the whole law system.But this situation has changed since 1978 as the government decided to found market economic system in place of planned economic system. On the one hand, not only state enterprises have independent legal status and are independently responsible for respective liability with their own property, but also the government permits...