Study On Legal Issues Of Catastrophe Insurance Securitization In China

China is vast, it’s geological features and climate conditions are complex and varied, it is recognized as the most frequent natural disasters in the world. In recent years, frequent earthquakes in Sichuan and Yunnan province are the best examples. Catastrophe risk is a typical risk with low probability but high risk of loss amount, "Hard for decades, night back to before liberation" reflects the affected people’s real situation, while the catastrophe insurance relief system which bears a heavy responsibility is absent. Life safety cannot get guaranteed, property damage cannot get full compensation, there not only bring great impact to economic development in the area, but also bring great uncertainty to people’s production and life. In the final analysis, the crux of the problem lies in the lack of post-disaster reconstruction funding sources and the lack of catastrophe insurance system. At this point, the international catastrophe insurance securitization provides us with the beneficial experience and inspiration. As we said, catastrophe difficulty divided by 1.3 billion will become insignificant, securitization of catastrophe insurance system is borrowed from such a simple truth:it is based on the modern risk management of diversification, transfer and hedge, comprehensive use of insurance and capital market risk transfer tools, transform the future insured for tradable securities, cash flow rights, and bring the catastrophe risk from accept insurance capacity limited insurance market and the government budget to the more abundant, more capacity and capital markets, thus expanded the scope of insurable risk, increased the accept insurance capacity, improved the insurance risk transfer efficiency, as a result,financial market provided the safeguard for pure risk indirectly, also realized the social fairness and justice.The inherent characteristics of catastrophe insurance securitization make it become a kind of ideal alternative risk transfer method, but how to operate specifically has become a major strategic issue to be resolved. From the reality, the insurance industry in China starts late, the public catastrophe insurance was unconscious. Management of catastrophe insurance losses run counter to reality and profitable goal of insurance company. For a long time, China’s political system, cultural tradition and big government, small market environment makes the unclear orientation of the role of government in the face of disaster. Securitization involves crisscrossed the country even the global reinsurance and capital markets, but the current market and regulatory environment under the rule of law is not perfect. Securitization of development ideas, operation model, participation main body and the difficulty of management technology, high requirements of the professional knowledge, basic data is not enough, the laws and regulations lag, etc., have different extent restricts the development of the securitization of catastrophe, insurance in our country. But we can’t give up, it is urgent to establish an effective mechanism of catastrophe insurance securitization norm. Of course, under the present economic development level in our country, it is obviously not conform to the national conditions to fully comply with the catastrophe insurance securitization development model of United States and other developed countries. On the other hand, the catastrophe insurance securitization itself also has some disadvantages, we need to overcome these difficulties in the beginning of exploration and test. In any case, "clear and complete legal system" is the primary factor in the catastrophe insurance securitization activities in China.