Study Of China's Insurance Policy

The Chinese insurance industry has obtained great achievements after more than 20 years' development. However, some problems have been arising during this period. It's necessary to establish a special policy, that is, insurance policy to solve these problems and blueprint the future. This dissertation consists of three parts, which contain six chapters. Chapter One and Chapter Two make up the first part, which discusses the background and framework of insurance policy. Part Two has three chapters, dealing with the three insurance policy instruments separately, which are industry organization policy, finance policy and taxation policy. The last chapter, chapter six, makes up Part Three. This part is focused on the evaluation of insurance policy effects. Chapter One studies the background of insurance policy. The Chinese insurance industry has obtained great achievements after 20 years' development. For example, market system has been built up to some extent; insurance premium income has been continuously increasing; and the supervision has become standardized. Accompanied by these successes, the Chinese insurance industry has met with some problems in the past several years. The growth rate of premium income is decreasing; the industry profit ratio is on the decline; the whole industry is seriously short of capital, etc. In order to solve these problems, it's necessary to build up an insurance policy system. An effective insurance policy will construct a supportive environment, from market structure environment, investing & financing environment, and taxation environment.Chapter Two first reviews the relative policies during past time in insurance industry, and then comes up with the framework of insurance policy. The framework contains several parts: the property and the function of insurance policy, who makes insurance policy, what the policy objective is, what the policy instruments are and how to evaluate the policy effect. Chapter Three studies the first policy instrument, the industry organization policy. This instrument deals with the relationship among market structure, market conduct and market performance. The objective of this instrument is to build up a competitive market structure, which can optimize the insurance companies' behavior and improve market efficiency. According to the statistics of premium income in the year 2000, we find that both the Chinese life and non-life insurance market is highly centralized. Further-more, the average premium income of each company is much higher than that of some highly developed western countries. This case shows that the Chinese insurance market structure is oligarchic monopolization. This special structure is harmful to market stabilization. The Japanese insurance market, which has the same market structure, has experienced several bankruptcy events. In order to avoid similar events in the Chinese insurance market, the policy maker has to establish a competitive market. The probable methods include increasing the number of insurance companies, releasing restriction on insurer's organization structure, etc.Chapter Four discusses the second instrument of insurance policy: investment and financing policy. It is imperative to reform the existing investment policy for two reasons: (1) the Chinese insurance industry has accumulated great interest rate risk in the past several years; (2) the foreign insurance companies have more investment channels than Chinese companies. In order to eliminate the interest risk and increase competitive power of domestic industry, the emphasis of investment policy is to broaden the investment scope of insurance funds. Financing policy is to improve the capital ratio of domestic insurance industry. Lacking of capital is a serious problem, which baffles the Chinese insurance industry development. Several ways could be used to reinforce the industry capital. Foreign insurance capital could be introduced; other domestic enterprises should be encouraged to invest in insurance industry, or the insurance companies sh...