Insurance Company Solvency Regulation Research

The insurance regulation includes entity regulation, business regulation, financial regulation, investment regulation and solvency regulation. The article mainly focuses on the solvency regulation. Solvency of an insurance company is composed of capital, reserve, guaranteed funds, free reserve and minimum solvency margin. The most important objective of the article is to study the methods of solvency regulation. Generally the article concentrates on the study of the methods of solvency regulation of USA, European Union and Japan, and then offers a systematic introduction to the solvency regulation in China.The article is composed of four chapters. Chapter one briefly introduces the classification of the risks, including the asset risk, liability risk, asset/liability matching risk and operational risk faced by the insurance company; and then provides a general discussion of the insurance regulation and the solvency regulation. Chapter two, which is the core of the article, discusses the three main models of solvency regulation, including insurance regulation information system, risk-based capital, financial analysis solvency tracking and cash flow test in USA; the provisions about solvency margin, guaranteed funds and technical reserve in the three directives issued by European Economic Council; and the methods of solvency regulation in Japan. At the end of Chapter two, the three models are compared.Chapter three discusses the guaranteed system that is necessary to solvency regulation, including insurance credit rating, corporate governance and external audit system. The function, concept and efficiency of the credit rating are discussed in detail. Chapter four discusses the history and present situation of China's solvency regulation, analyzes the existing problems of solvency regulation in China. The conclusion drawn from the discussion is that China has a long way to go from marketplace regulation to solvency regulation. At present, insurance industry of China is developing rapidly and many problems are coming forth, so how to improve the market system is the main task of insurance regulation. Therefore, China's solvency regulation should significantly depend on the marketplace regulation on the basis of "safety" concept, and regard the solvency regulation as the supplement measure.Since non-life insurance companies and life insurance companies have different risk and underwriting objective, the methods of solvency regulation are also different for them, so the article discusses the two issues separately in order to make the study more straightforward.