Agricultural Catastrophe Insurance Market Research Government Intervention

China is one of countries greatly impacted by natural hazards, where,8of54catastrophes around the world happened in the past20th century. Between1989and1996, the proportion of the lost of natural hazards in GDP was3%to6%and average in3.9%. China, however, is also a developing county lacking of insurance cover. Thus, a large number of people still been leaving vulnerable after a catastrophic event occurs, especially in rural. In fact, effective agricultural insurance in China does not exist for a long period.A striking turn began rang of support (and premium subsidies) with government in2004. Only in4years did the agricultural insurance market dramatically grow to become the second largest market in the world in2008. However, catastrophic risks, which severely affect the production of crop and livestock on a large scale, restrict the growing of agricultural insurance in future. How to manage agricultural catastrophe insurance gradually became a topic since2008(maybe after the Sichuan earthquake).This paper aims to analyze above question from the role that the government should play in the agricultural catastrophe insurance market. As it said before, this is a new market which is based on the support of public sector and the recent raising agricultural insurance. We can anticipate that the further development will more strongly depend on the intervention (policies, support, subsidize, etc.) of the public sector. Five parts will be discussed in this paper. In the first part, some background about this analyze will be introduced. The second part overviews of the conceptions of the agricultural catastrophic risk and insurance, and the trade of agricultural insurance and catastrophic risk management in China, including the role once the government played."Why and how should government intervene in agricultural catastrophic insurance?"---Main content are viewed in next two parts. As a matter of fact, Market impediments or market failures are often invoked to justify public intervention in the provision of agricultural catastrophe insurance. This paper put forward five aspects of market failures from supply and demand in economic analyze, such as systemic risk uninsurable of catastrophic risk, informational asymmetries, and so on. What’s more, the methods of government intervention are based on the theory of "market-enhancing-view". According to this view, the government should enhance or offset the coordination of private sector, rather replace or extrude them. Thus, in order to develop the market, the government should take actions like making insurance lows, subsiding to farmers and private companies, reinsurance, and so on. Also in this part some experience from national and an example of the agricultural catastrophe insurance in the United States are provided. In the last part, the paper examines the situation of current agricultural catastrophe insurance in China。 First, the national hazards in China need a kind of efficient catastrophe insurance system. And then, the paper considers that the existing agricultural insurance system will be the basis for the catastrophe insurance. What’s more, the paper advances four problems of the government intervention in future catastrophe insurance.