On The Regulatory And Legal Regulation Of Insurance Companies To Taste Ability To Pay

The system of insurance regulation has been initially built up in China, but there are still some unstable factors in the market, such as abnormal competition. The fundamental reasons for the unsuccessful regulation has not been developed widespreadly. In order to change the situation, research on this area including basic theory and methods should be reinforced. The aim of this article is to fill in the gaps of the insurance industry lowest solvency margin within the country nowadays adhering to laws and rules in this field according to The Insurance law of The peopl&s Republic of China. In order to succeed in examing the operating progresses. directing business in accordance with rules, managing operation strictly and maintaining stability. The insurance industry can absorb the quintessence from this research. Solvency regulation is the core of insurance regulation. Effective solvency regulation relies on effective solvency regulatory instruments which are designed on the basis of mathematical principles of insurance business.Using the concept of financial stability coefficient, the paper constructs two models, which respectively shows the relationship between solvency and liquidation of equity in an insurance firm. Then a mathematical explanation of two solvency regulatory instruments. which are set in Chinese insurance statute, is given respectively. In another word, the conflicting relationship between effectiveness and efficiency of the two instruments is explained in economic viewpoint. So all the analysis above could provides some enlightenment for designing, assessing and improving a solvency instrument or improving solvency regulation.