Study On Protection Of The Rights And Interests Of Policyholders During Bankruptcy Liquidation Of Insurers

The insurance industry of China is developing well at present,but looking at the world,the United States,Japan and other financial developed countries,their blind selfconfidence that the financial institution is “too big to fail” is finally defeated by the example of bankruptcy in reality.Although there is no insurer went bankrupt in China up to now,this does not mean that China's insurance industry is less risky and there is no risk of bankruptcy.On the contrary,the imperfect market exit mechanism will cause the insurance industry to accumulate more risks.Therefore,China should construct a system of bankruptcy liquidation of insurers in advance,and in design of this system,it is important to protect policyholders.This article is divided into four chapters to study on protection of the rights and interests of policyholders during bankruptcy liquidation of insurers.Chapter 1 analyses the current situation of protection of the rights and interests of policyholders during bankruptcy liquidation of insurers in China.There are two main legislative modes for bankruptcy of financial institutions,including insurers.One is the unitary legislative mode in which financial institutions shall be governed by the common bankruptcy laws,represented by the United Kingdom.The other is the dual legislative mode in which financial institutions shall be governed by the special bankruptcy law,represented by the United States.The two modes gradually merge in the development of financial practice.After intense discussion during the formulation of the Enterprise Bankruptcy Law of the People's Republic of China,it was finally determined that the provisions of the Enterprise Bankruptcy Law of the People's Republic of China shall be applied to financial institutions in principle,but specific implementation measures for bankruptcy of financial institutions shall be formulated by the State Council.It is thus known that China adopts a compromise legislative mode different from the unitary legislative mode and the dual legislative mode.However,the proposed special provisions on bankruptcy of financial institutions in the form of administrative regulations may easily lead to the violation of the upper law,which does not conform to the relevant provisions of the Legislation Law of the People's Republic of China.In the end,China should construct a system of bankruptcy liquidation of financial institutions in the form of law.At present,the provisions on protection of the rights and interests of policyholders during bankruptcy liquidation of insurers are scattered in different laws and regulations.The protection system stipulated in the Insurance Law of the People's Republic of China includes two kinds: one is about the system of priority liquidation of the claims of policyholders.Article 91,paragraph 1,of the Insurance Law stipulates that compensation or payment of insurance money enjoyed by policyholders shall be paid in the third order after bankruptcy expenses and post-insolvency acceptance debts and labor claims.However,the scope of priority claims is narrow,does not cover all types of claims of policyholders,and does not develop different protection according to the classification of policyholders.The other is about the system of transferring insurance contracts when an insurer goes bankruptcy liquidation.Article 92 of the Insurance Law stipulates that where an insurer engaging in life insurance business is declared bankrupt,the life insurance contracts it holds shall be transferred to another insurer which engages in life insurance business;where the insurer is unable to reach a transfer agreement with another insurer,the insurance regulatory department of the State Council shall designate an insurer which engages in life insurance business to accept the transfer.However,this clause only applies to life insurance contracts.The transfer of non-life insurance contracts in bankruptcy liquidation lacks legal basis.At the same time,the system of change of contract content attached to the transfer of insurance contracts is absent,which makes the transfer difficult to achieve in practice.In addition,China has specifically set up the insurance protection fund rescue system in the Administrative Measures on Insurance Protection Fund,which is mainly used to provide relief to the transferee of life insurance contract and policyholders of non-life insurance policy when an insurer goes bankruptcy liquidation.However,according to the Insurance Law,the specific implementation measures for the insurance protection fund shall be formulated by the State Council.So,the current Administrative Measures on Insurance Protection Fund formulated by China Insurance Regulatory Commission,Ministry of Finance and People's Bank of China is no longer in conformity with the Insurance Law.At present,the Administrative Measures on Insurance Protection Fund stipulates that insurers shall pay insurance protection fund according to a certain proportion of premium income.The single rate mode is not fair to insurers with high risk management level,and the insurance protection fund lacks financing methods.Once the large-scale bankruptcy liquidation of insurers occurs,there may be a fund gap,and its investment object is strictly limited,which aggravates the problem.The insurance products that the insurance protection fund relieves are too large,and there is no maximum amount of relief,which brings a great burden to the insurance protection fund and is not conducive to the long-term development of the insurance guarantee fund.Chapter 2 mainly discusses why shall protect policyholders and the basic principles of protecting during bankruptcy liquidation of insurers.First,it analyses the necessity of protecting policyholders from the perspective of the weak position of policyholders,the particularity of the insurance contract and the maintenance of the stability of the insurance industry and social order.A.The information in the insurance market is highly asymmetric and professional.It is difficult for policyholders to really understand insurance terms.Moreover,policyholders usually lack negotiation qualifications.In fact,they are in a weak position.Only by special protection of the law,can they truly achieve equality.B.The insurance contract is a kind of aleatory contract.The right that policyholders enjoy is to get compensation or payment of insurance money when the risk agreed upon in the contract occurs,which is not a definite monetary right.But in bankruptcy,the creditor's rights must be converted into definite monetary debts to be protected,which is contrary to the aleatory nature of the insurance contract.C.Bankruptcy of insurers usually involves many policyholders.If the problem is not handled properly,it may affect the stability of the insurance industry and easily become a social problem.Second,it discusses principles of protecting policyholders during bankruptcy liquidation of insurers.A.The principle of special protection,that is,the legislative goal should be changed from equal protection to special protection,and policyholders should be protected in a special legal position.This is mainly reflected in: when an insurer goes bankruptcy liquidation,the rights of policyholders can be paid in priority and can get minimum protection from the insurance protection fund,and a continuation system has been set up for the insurance contract.We also should adhere to the principle of moderate protection.Although the rights and interests of policyholders should be specially protected,when an insurer goes bankruptcy liquidation,it usually means that its assets are insufficient to pay all debts,and the special protection of one subject will adversely affect other subjects.Therefore,the protection must be moderate,that is,to provide different measures to different policyholders,to set up the proportion and limits of protection and to protect them within the scope of legal provisions.In addition,the principle of moderate protection also requires special protection to be compatible with the economic development stage and the law of financial development,and to constantly adjust measures and degree of protection in practice and do not at the expense of disrupting the operation of financial markets.Chapter 3 first puts forward some suggestions on the system of priority liquidation of the claims of policyholders during bankruptcy liquidation of insurers.The most direct way to protect policyholders is to establish a system of preferential payment of their claims.A.Expand the types of priority claims.Claims for unexpired premiums or cash value of insurance policies are not included in the scope of priority claims,which puts these policyholders in a dangerous situation without special protection.When China subsequently amends the Insurance Law,these claims should also be included in the scope of priority claims,so that the same insurance claims can be equally protected.B.Define the scope of subject of priority claims.Current provisions of China are relatively rough,and these do not provide classified protections for policyholders.Because reinsurance policyholders and institutional policyholders have higher risk-bearing capacity and risk-dispersing capacity,they should be excluded from the scope of subject of priority claims.Individual policyholders should be further subdivided,and professional individual policyholders should also be excluded from the scope of subject of priority claims.C.A complete priority liquidation system also needs to have perfect procedures,from notification and announcement to declaration of creditor's rights,it needs to have specific provisions.Second,Chapter 3 puts forward some suggestions on the system of transferring insurance contracts when an insurer goes bankruptcy liquidation.A.The system of transferring non-life insurance contracts should be added.However,based on the long-term and savings nature of life insurance contracts,the two should be protected differently,mainly in the way of transferring.Life insurance contracts should be transferred by agreement,otherwise by designation,that is to say,the bankruptcy insurer and other insurers negotiate transferring first,and where it is unable to reach a transfer agreement,the supervisory authority shall designate insurance protection fund company or its subsidiaries as assignees to ensure the continuation of life insurance contracts.The non-life insurance contract is entirely transferred by agreement.Where it is unable to reach a transfer agreement,rights of the non-life insurance policyholder are preferentially compensated from the insurer's bankruptcy property.B.Introducing the system of change of contract content attached to the transfer of insurance contracts,we should not only make it clear that policyholders have rights to vote,that is,the transfer of insurance contracts should be publicized and the period of objection should be set,but also restrict the range of change through legislation,such as the increase of premium rate and the decrease of insurance amount,at the same time,we should add review mechanism in insurance contract transfer.Chapter 4 aims to put forward some suggestions on the insurance protection fund rescue system during bankruptcy liquidation of insurers.First,sufficient rescue fund can make the legislative protection of policyholders into practical protection.In order to ensure the insurance protection fund sufficient,the payment standard and the way of raising fund should be revised.The current single rate mode makes insurers with high risk management level subsidize insurers with low risk management level for a long time,which can lead to adverse selection and moral hazard.Compared with the payment mode of deposit insurance,securities investor protection fund,futures investor protection fund and trust protection fund,all of these considering the difference risk of different subject,are fairer and more reasonable.The payment standard of the insurance protection fund should be revised and paid at the base rate plus different risk rate.In terms of raising fund,there are three ways in the world: raising before the event,raising after the event,and combination of the both.Based on the theory of a veil of ignorance,when the insurer can not judge his future status and can not predict who will encounter bankruptcy and need the protection fund,it is obviously more tolerant to raise fund on the insurer.Moreover,raising before the event it is helpful to deal with bankruptcy liquidation of insurers in time and protect the rights and interests of policyholders.In addition,insurance protection funds of Britain and Japan became insufficient in the history.In order to alleviate the financial pressure,it should be clear that insurance protection fund can be financed in various ways and expand its investment scope.Second,the main purpose of the insurance protection fund is to protect the rights and interests of policyholders,and its use should also take this as the main purpose.It can not be used arbitrarily in order to avoid the bankruptcy of insurers.According to the existing provisions,only after the bankruptcy insurer has paid off policyholders,the difference between the compensated amount and the benefits of the insurance policy can be relieved by the insurance protection fund.However,this process may last for several years,which is not conducive to the protection of policyholders.The insurance protection fund should advance the time of providing relief.The insurance protection fund should first provide policyholders with a statutory limit of relief,and then the former should take the place of the latter,participate in the bankruptcy liquidation procedure of the insurer and obtain compensation from the bankruptcy property.Furthermore,China should refine the scope and limit of the insurance protection fund,exclude institutional policyholders,reinsurance policyholders and professional individual policyholders from the scope of the rescue.In order to support the system of transferring non-life insurance contracts,the transferee of non-life insurance contracts should be included in the scope of the rescue,and at the same time,different proportions and limits of the rescue should be provided for different types of insurance products.