Study On The Moderation Of China’s Insurance Regulation

In a world of classical economics and neoclassical economics, market, in most of the period, is in or close to a stable state. The function of the government is to enact laws and regulations, as well as protection of free competition and act as a "night watchman" role. However, the market economy is far from perfect. The existence of various defects needs the government to use the "visible hand" to intervene in economic activities so that it can make up for the defects of the market’s "invisible hand". Within the insurance industry, there also exists market failure caused by monopoly, externalities, etc. As the asymmetry information problem is more serious in the insurance system, there is no doubt of the necessity of regulation. While focusing on the need for regulation, the degree of regulation needs to be emphasized even more. Since China resumed the insurance business in1980, the reform and development of the insurance industry has made remarkable achievements. But from time to time, some bad signs of the phenomenon came out in the developing process. Public opinion often aims at the insurance regulatory authorities. Sometimes it accused of regulation inadequacy, or accused the regulators of too much interference in the operation of the market, what are the limits of insurance regulation? This paper attempts to make a useful theoretical exploration on the moderation of insurance regulation. And to find a path which is consistent with the laws of insurance market and adapt to the degree of development in insurance market, without obvious distortion of resource allocating mechanism in the market. We try to balance safety and efficiency in the perspective of regulation, and ultimately achieve the greater realization of insurance functions and better protection of the interests of policyholders.The research idea of this study is built around fundamental goal of constructing China’s insurance market regulatory system. We propose a standard of analysis on the moderation of insurance regulatory by drawing the main research results. Combined with the international and domestic development and status of the insurance market regulation, we try to give the basic idea of China’s moderate insurance regulation, as well as its institutional framework and specific countermeasures. On research methods, this article uses a combination of qualitative and quantitative research, also a combination of empirical and normative analysis and the unity of historical and logic approach. It is divided into seven parts. First chapter is introduction. This section describes the background and significance of topics. It also defines some important concepts and proposes research ideas and research methods. Chapter Ⅱ is about regulatory theory and its basis. The arguments of economic liberalism and state interventionism largely dominated the rise and fall of different schools of economics. The evolution of regulation theory is carried out in this context. This chapter sorts out the major schools of regulation theory, summarizes their main points and briefly evaluates their theoretical defects, which makes theoretical preparation for the research on the basis of the review and summary. Chapter Ⅲ, the insurance regulation and its moderation. This chapter examines the particularity of the insurance system and explains the source of insurance regulation. Working in concert with chapter II and combining with the uniqueness of insurance industry, we discuss the generation of the insurance regulation and problems about how to maintain its vitality, as well as the dangers of over-regulation. Chapter IV, indicators of measurement on moderation of insurance regulation. This chapter first defines the meaning of moderation of insurance regulation, and explains the boundary of strength and structure of the insurance regulation. Then, we establish the insurance regulatory model and demonstrate the existence of the tendency to over-regulation in insurance regulation. Since a single indicator cannot measure the moderation of insurance regulation, this article tries to measure from four aspects, which are the resources invested in insurance regulation by government, insurance market security, the efficiency of insurance markets and the correlation of insurance and financial markets. Chapter Ⅴ, the international comparison of changes in moderation of the insurance regulation. This chapter examines the history of changes of insurance regulation moderation in the world’s major well-developed insurance market and analyzes the reason and the change mechanism. In the comparison, we find that the degree of regulation is determined by the pursuit of efficiency and system security in different historical contexts. In different historical and economic conditions, the emphasis will be different, thus the solution for the moderation of insurance regulation is not static, it will be a long, gradual process of evolution, also becomes more appropriate according to changing circumstances and local conditions. Chapter VI, the analysis of moderation of China’s insurance regulation. This chapter divides China’s insurance regulation after resumption into three stages, and sorts the history of each stage. Based on the measurement indicator in chapter Ⅳ, we conduct an empirical analysis on the moderation of insurance regulation. In view of the lack of moderation of insurance regulation, we make analysis from the aspects of regulatory history, regulatory philosophy, regulatory system construction, self-building of regulatory agencies, and other external factors. Chapter VII, the construction of China’s moderate insurance regulation system. The purpose of this chapter is to make constructive and feasible route map of China’s moderate insurance regulation. First, make the clearance of ideas, to indicate the direction of improving moderate insurance regulation. Second, set up the institutional framework to provide the basic platform for the elaboration of the regulatory rules. Third, to provide environment protection for the moderate insurance regulation based on the countermeasure on market exit mechanism, insurance protection fund system, optimization of the financial market environment, new trends in the international financial regulatory reform and other aspects.Innovation of this paper is mainly reflected in:First, the innovative topic which is not confined to general insurance regulation, the paper launches a systematic explanation and argument that extend and enrich the theory of insurance regulation and its effectiveness. At present, China’s insurance regulation and related analysis mainly focus on the regulatory approach, institutional building and efficiency improvements of regulation. The discussion of insurance regulation moderation is extremely rare. In reality, there are many problems exist in the domestic insurance market. The moderation of regulation, as a hot topic, is not only concerned with the current insurance market, but also an important factor that influences the performance of the market in the long-run. This paper chooses the topic of moderation of insurance regulation, which is a relatively neglected domestic research area. With the theory of regulation as a tool and the use of theoretical and empirical and comparative research methods, it reflects China’s insurance regulatory history and current status, and carries out the research and exploration of the moderation problem. It has the value of enriching the theory of China’s insurance regulation, while providing a theoretical and ideological basis to guide China’s insurance regulation. Second, this paper builds an analysis framework of insurance regulation moderation and its indicators, which provide novelty and valuable analysis tool for China’s moderate insurance regulation. Combined with the existing research results of insurance regulation, this paper defines the meaning of moderation of insurance regulation in an innovative perspective. It also brings out the concepts of the boundary of strength and structure of the insurance regulation, as well as the analytical framework. Then it proposes and establishes the indicators to measure the moderation of insurance regulation. By using the framework, approaches and tools, we analyze, determine and assess the China’s moderation level of insurance regulation from a holistic perspective. These ideas, methods, criteria and tools are not only the result of innovative research, but also guides on the moderate insurance regulation. Third, based on certain theories and new dimensions, this paper proposes many ideas and policy recommendations, which has a positive reference and guidance on reality. These mainly reflected in:in-depth analysis on the development of moderate insurance regulation in developed insurance market reveals the mechanism of changes in moderation. The outlook of changes in moderation is undoubtedly worthy of our drawing. It forms a basic judgment on moderation of domestic insurance regulation, points out the existence of deficiency of China’s moderate insurance regulation, and lays the ideological foundation to improve it. The paper also proposes to build the mainstream of deregulation, set up the purpose to serve the market and make the trend of unity of the regulation, which guide regulatory developments with positive significance.The inadequacy of this paper is mainly reflected in:First, due to lack of historical data, empirical analysis is insufficient. If there is sufficient data to support, we believe a more convincing answer to what scale of insurance regulation to promote both efficiency and safety is appropriate can be reached. Second, the proposed indicators system to measure the moderation of insurance regulation is still relatively rough. The lacking of detailed comparative analysis of domestic and international indicators leads to insufficient comparison of moderation in insurance regulation. With the development of regulatory practices, data accumulation and the deepening of theoretical research, empirical research will be further strengthened, the measure indicator of moderation of Insurance regulatory will continue to be improved, which is also the important issues that the author will keep track of in the future.