Research On The Risks And Legal Supervision Of Insurance Funds' Investment In The Stock Market

The investment of insurance funds is directly related to the fundamental interests of the insured and the stable development of the insurance industry.More and more insurance funds are being invested in the stock market since the CIRC allowed insurance companies to invest in securities investment funds in 1999.But with the rapid development of China's insurance industry and the stock market,a lot of problems have been caused by insurance funds' investment.Some of the insurance companies' investment behaviors were too aggressive and caused a series of criticisms in society in the last two years.And the imperfections of the existing legal supervision systems are gradually exposed.This paper attempted to analyze the existing legal supervision systems of insurance funds' investment in the stock market from the perspective of law.Combined with the basic theories of law,finance and management,a lot of legal provisions were involved in the process of researching on the risks caused by the insurance funds' investment,the evolution of relevant legal supervision,and the existing legal supervision system.The risk prevention measures in the existing legal supervision system were mainly expounded and the center of this paper was to research how to prevent risks more efficiently.After analyzed the insurance funds'source,characteristics,investment modes in the stock market and related cases,found that insurance funds' investment in the stock market will bring different kinds of risks.During the investment process,the insurance companies face investment risk which is constituted by market risk,listed companies' operating risks and internal risks.The listed companies face the risk of company ownership fighting and the risk of stock price fluctuation.The stock market faces the risk of volatility.In order to prevent the occurrence of the above risks,the CIRC had been improving the legal supervision system since the insurance funds were allowed to invest in stocks.In the existing legal supervision system,the CIRC limited the ratio of stock investment at multi-levels to prevent market risk and listed companies' operating risks,established a strict internal control system from both internal capital control and internal risk control and a strict accountability system to prevent internal risks,and set up an information disclosure system which contents and difficulties gradually increased.Although the legal supervision system had become increasingly perfect,there are still many problems,such as the supervision authority is too centralized and the separate supervision mode leads to over-regulation or lack of regulation,the relevant policies and regulations'legislative level are too low,the penalties are not strong enough,and insurance companies' short-term operations haven't been controlled properly.To solve the problems above mentioned,the regulatory authorities should keep on implementing territorial supervision on the supervision of insurance funds' stock investment and strengthening the coordination mechanism of financial supervision to make up the defects of supervision subjects,promoting the insurance investment law as soon as possible to raise the legislative level of relevant policies and regulations,increasing the intensity of penalties by improving the contents and extents,strengthening the supervision of investment insurances and releasing the funds' operation authority of insurance companies' provincial branches so as to control the insurance companies'short-term operations.