On The Conversion Of China's Commercial Insurance Regulatory Model

Insurance is an industry with high risk. Because of the social characteristics andthe market ineffectively, insurance regulation becomes an essential trend. However,insurance regulation is not omnipotent. As all other regulation actions, it has cost,which brings out the performance issue of insurance regulation. When the extent ofregulation is low, the cost is also low, but the market disorder will decrease theoutcome of the market. On the other hand, when the extent of regulation increases, thecost also increases, and the market works well while increase the insuranceperformance. However, if the regulation is too strict, the insurance performance willagain decrease. Therefore, the extent of regulation is extremely important for thedevelopment of insurance market. Only when we select the proper regulation model,we can develop the insurance market to the greatest extent. If the regulation is eithertoo strict or too wide, it will hamper the allocation of insurance resources. Theinsurance industry in China has developed through half a century, especially in recentyears, although it has maintained a high development speed and gained great success,the overall scale is relatively too small, which is unsuitable for the development of theeconomy society. The functions of insurance have not amply embody its role. Thereare many factors that can explain this problem, one of which perhaps is that theexisting strict regulation system hampers the activeness of Chinese insurance market.When the subject of the insurance system is not mature, the market is disorder, andthe micro-self discipline mechanism as well as the industry discipline mechanism is inthe initial status, strict insurance regulation model is reasonable for protecting theright of insurers, guaranteeing the fair competition environment, regulating theinsurance market, excluding improper competition to some extent and prompting thehealthy development of the insurance market. However, strict regulation will hamperthe forming and development of competition mechanism, which will do harm to thedevelopment of insurance market and insurance regulation. Nowadays, it is not wiseto choose the strict regulation model in China's insurance industry. The purpose ofthis research topic is to discuss the necessity and feasibility of the reversion fromstrict regulation model to slag regulation model and to discuss how to conduct thisreversion. The title is "A Discussion on the Reversion of Business Insurance Regulationmodel in China". This paper is divided into 5 chapters. Chapter 1 analyzes thenecessity and cost of insurance regulation. Chapter 2 analyzes two models ofinsurance regulation and the international deregulation trend in the industry. Andintroduces the development and the status quo of China's insurance regulation.Chapter 3 analyzes the theory basis and background of the model reversion. Chapter 4further probes the trend of insurance regulation model reversion. Chapter 5 discussesthe environment guaranteeing the successful conducting of insurance regulationmodel. The main content of this paper is as following: Chapter 1 theoretically and practically discusses the necessity of insuranceregulation and points out that the government specially regulates insurance industryprimarily to assure the security and efficiency of the insurance industry while insurethe interests of insurers. Then, the paper states that regulation is necessary but notomnipotent from a cost-efficient view. The extent of regulation is important for thedevelopment of the insurance industry. Only when we selected the proper regulationmodel, can we maximize the outcomes of the insurance industry and prompt thedevelopment of the insurance industry to the greatest extent. Either too strict or tooslag regulation will do harm to the best allocation of the insurance resources. Chapter 2 divides the regulation into two classifications according to thedifferences among countries and districts: slag regulation and strict regulation, andconcisely analyzes and evaluates their characteristics. Then, the paper...