Application Of Liability Insurance In Mass Torts Risk Management Of China’s Enterprises

In recent years, with the development of science and technology, production and consumption of increasingly large-scale, illegal production operations and new technology uncertainty, mass tort accidents have increased gradually in some areas,such as food security, environmental pollution and serious incidents which have become the focus of the public and media’s attention. Mass torts always have a large number of victims, the extent of the loss, complex causal relationships, and Have a huge impact on the social order, and received more and more attentions.Liability insurance, as an important means in risk management, could diversify risks in a wide range, promote risk control, and reduce the losses of accidents, protect the rights of victims, and also could contribute to social harmony. But the application of the liability insurance in the risk management of mass torts risk in China is very inadequate. This is because our legal system is not perfect and law enforcement is not strict, which makes the development of China’s liability insurance lack of legal basis; it’s difficult for citizens to pursue their rights and some citizens have poor rights awareness, which makes the development of China’s liability insurance lack of a good social environment; and it’s difficult to control moral hazard and adverse selection brought by information asymmetry. All those reasons make the effective supply and demand in China’s insurance market insufficient. So, many scholars and policy makers have called for the promotion of compulsory liability insurance. Through the analysis of interests Game between the government, insurance companies, risk behavior and victims, we can find that compulsory insurance should be introduced in the areas which have large probability of risks occurring and large extent of the loss, and often need the government to spend a high accident disposal costs. If the government stand on the perspective of safeguarding their own interests and the interests of victims, it’s more likely to choose the level of maximum protection. However, the government also needs to consider the requirements of the supply and demand sides in liability insurance market.Improvement of mass tort risk management mechanisms, need liability insurance to play its role in risk compensation and risk control, in order to reduce the accident caused by mass torts risk, protect the interests of all parties, and promote social harmony and stability. This paper is divided into seven parts. The first part is an introduction, introducing themes background and significance, as well as the main innovations of the paper and shortcomings. The second part is a literature review. The third part analyzes the status quo of mass tort risk management, including mass tort risk and their characteristics, the causes of the introduction, and the status quo of mass tort risk management analysis. Part IV analyzes the status quo of the use of liability insurance in China’s mass tort risk management. The fifth part introduces the boundary of two types of compulsory liability insurance, analyzes standard and mode selection of the introducing of compulsory liability insurance in China, and the problems that need to pay attention. Part VI, talks about the application of liability insurance in the mechanism of China’s enterprises mass torts risk management, composed of accident compensation mechanisms and risk prevention and control mechanism. The last part is a summary of the article and the outlook for the future research.