Interaction Mechanism Of The Insurance Industry And Urbanization

Urbanization is an economic phenomenon associated with the process of industrialization and economic development. The party’s 18-round discusses the importance of urbanization problems, explicitly requires focusing on improving the structure of demand, optimizing industrial structure, promoting coordinated regional development and promoting urbanization. Also, efforts should be focused on solving the major structural problems that constraint sustained and healthy economic development.The strategic goals of promoting the simultaneous development of industrialization, information technology, urbanization, agricultural modernization and "significantly improved the quality of urbanization" are made. In the context of the new urbanization, this paper, based on previous studies on the relationship between financial development and urbanization home and abroad, raises up the subject of exploring deeply the interactive mechanism between process of urbanization and development of China’s insurance industry. This study, based on the raw data of 35 big and medium cities of China during 2001 to 2011, construct simultaneous equations model, and use 3SLS method to explore the interactive relationship between the development of the insurance industry and urbanization interactive relationship. The empirical results show that no matter the fixed effects model or the three-stage least squares method is applied, the sound development of insurance industry will ensure it participating in and promoting the process of urbanization, to play its unique role in social security and risk management; Conversely, the higher level urbanization will boost the local demand of insurance, which will lead to further development of the insurance industry. Therefore, there does exist a positive interaction between urbanization and the development of insurance industry. This conclusion will provide important reference for China. On the one hand, by reforming policies, laws and regulations, the regulatory authorities can take full advantage of the long-term and big stock of insurance funds, to encourage insurance company to get more involved in urbanization, so as to promote the urbanization process; on the other hand, China’s insurance industry should also take the great opportunities brought by urbanization, to expand its own scale when insuring the urbanization process.