The Game Theory Analyze Of Adverse Selection In Rural Micro-Health Insurance

As part of the rural finance, rural micro-insurance for rural low-income workers disease,accidents, natural disasters, and property damage insurance coverage is an effective financialtool for poverty alleviation. At present, China is facing a widening gap between the rich andthe poor, lack of insurance coverage and other social problems of vulnerable groups in urbanand rural areas, low-income workers and their families face a greater risk than ordinary peopleand their families. The implementation of the rural micro-health insurance not only canreduce the loss of low-income people to a certain extent and reduce the low-income due toillness,accident, etc., but also can effectively alleviate the social gap between rich and poor,conducive to promoting the building of a harmonious society with a more far-reachingpolitical significance. However, due to the particularity of rural micro-health insuranceservices, it requires the policy designing as simple as possible, underwriting, claims and otherprocedures as simple as possible. This will inevitably attract a large number of the insuranceneeds of farmers, especially in high-risk not afford to buy the traditional commercialinsurance customers, and eventually leading to severe adverse selection problem of ruralmicro-health insurance market, hindering the sustainable development of rural micro-lifeinsurance.Thus, research on the development of rural micro-life insurance and adverse selectionproblem is particularly urgent. Based on this, mainly from the following aspects to carry outthe study:First of all, on the one hand, starting from the historical transformation of the rural socialsecurity system, this paper introduces of the concept of rural micro-health insurance,combined with the condition and problems of the rural social security system, discusses therural micro-health insurance's benefits to the social security system in rural areas and thedifferences and links with rural life insurance; the other hand, analyzes its market demand,market supply hardly, and makes a comprehensive summary of its development experience,difficulties and challenges.Secondly, begin with the renewal to the insured, this paper designs a Reward andPunishment Mechanism, builds the dynamic game of imperfect information between theinsured and the insurance company, analyzes its mixed strategy Nash equilibrium solution, through the shell the application of the rule of Bayes: insurance companies can make use ofthe Reward and Punishment Mechanism, and gradually increase the reward and punishmentscale, to increase the probability of renewal of the low-risk policyholders, and then eliminatethe adverse selection problem of the micro-health insurance.Finally, application of computer simulation technology, this paper verifies the Rewardand Punishment Mechanism from two aspects: the risk discrimination of the reward andpunishment mechanism and the level of premiums trends. Simulation results show that theincentive mechanism has a clearly risk discrimination, and the steady-state of premium can becan be achieved within a shorter period (six years).