The Empirical Research On Underwriting Capacity Of Catastrophe Risks In China’s Property Insurance Industry

Since the 20th century, along with the acceleration of global urbanization, population growth and changes in the natural environment, natural catastrophes and man-made catastrophes caused devastating rapid expansion. In China the invasion of natural disasters is also very serious,the frequent occurrence of the catastrophe is a big obstacle and destruction to our national economy and people’s lives.In the past 10 years,the average insurance payment for world catastrophe was 34.34%.For a long time in the course of our country dealing with catastrophe losses, the insurance industry has played a minimal role.For example,in 2014 the earthquake in Yunnan Ludian insurance payments was only 3.7% of the total losses.The practice in countries where the catastrophe risks dispersion is developed shows that the role of property insurance industry is very critical in dispersing catastrophe risks.Therefore, China’s property insurance industry should give full play to its compensation function and be initiative to undertake more social responsibility, then provide channels to transfer and disperse catastrophe risks in our catastrophe risks dispersion system.In this context, China’s property insurance industry in what extent can it provide to underwriting catastrophe losses is a question worth to considering.The paper use the reaction model of underwriting capacity of catastrophe risks.And make the empirical study on the underwriting capacity of China property insurance companies and property insurance industry in facing with catastrophic loss.First,analysis the characteristics of catastrophe risks and the conditions to transform into insurable risks in the basic of analyzing the research related to catastrophe risks.Secondly,summarize the model of catastrophe insurance system.Then assess the gap of underwriting catastrophic risks of China property insurance industry in the background of the distribution of catastrophe risks in China.Finally,propose the recommendations on improving the ability of underwriting capacity of China property industry according to the results of empirical analysis and the successful international experience.The results shows that there are significant gaps in the underwriting capacity of insurance industry in our country.And there are many reasons for this outcome.From a market perspective,the imperfections and irrational structure of China’s property insurance market, capital market and the reinsurance market have resulted in a large gap in the underwriting of catastrophe risks. From the perspective of the operating of property insurance industry, the underwriting business, investment business,and operational risks will affect the capacity of underwriting the catastrophe risks of its own.Therefore, in order to enhance and improve underwriting capacity of property insurance industry,the government and each subject of the market should be coordination with each other and build a sound catastrophe risks management system.