Options In The Insurance Applied Research

As a successful derivative of the financial innovation in the international financial markect ,option has livened up the development of the insurance theoty . The birth of insurance option, compared into "a delayed baby ", has brought a tremendous impact into the theory and practice of the insurance and has had a great effect on the insurance industries.Modern insurance industry is beginning to infiltrate the foudamental functions of the traditional insurance industry by the technology of option .The risk for insurance is transferred into the rich capital markect by means of the fund penetration from the insurance markect to the capital markect so that the dilemma in the deficits of the insurance and payment abilities could be alleviated .The insurance industries all over the world are pursuing the effective methods and ways to transfer the insurance risk and to improve the ability of the insurance companies'payment .The securitization of insurance risk is a trend of the development of the insurance industry by gaining the support of the capital markect .Insurance option ,a successful product emerged in the trend ,lets the management of the risk in the insurance industry enter into a newly stage . Firstly ,on the basis of the relation between the risks in the insurance industry and option, this paper explains the concepts and classification of insurance risks,as well as the generationand internal value of option .Secondly ,the article analyzes the theoty of averting risk and the prime characters of the management of the insurance risks by application of option and puts forward how to apply to option to control the insurance risks availably .Thirdly ,the article foundly illustrates the insurance option ,describes the implications of the insurance risks in detail,studies the differences between the insurance option and reinsurance ,and argues the causes and probability of the insurance option ,as well as the feature of the products of the insurance option .Then the paper studies the application of the option pricing theoty in the insurance ,mainly probing into the theoty of the insurance option from three aspects : the pricing theoty of the insurance option on the basis of the interest rate,the pricing theoty of the insurance option on the basis of the indexes and the pricing theoty of the insurance option on the basis of small-probability incidents.At the same time ,it respectively analyzes them with examples.Finally ,the article studies the development and challenges of the insurance option in Chinese insurance industry,mainly analyzing the potential factors in developing the insurance option in China and all kinds of obstacles in setting up the insurance option markect .On the basis of the reference to the successful experience of developing the insurance option in the international insurance markets and in combination with the truth of the development of the insurance markect in China ,this paper puts forward a series of countermeasuresfor the foundamental construction of the insurance option markect at present in China in the light of the necessary of improving the systems in Chinese insurance and financy, ends with the beneficial references eventually provided with to set up a sound and orderly insurance option markect.