Researching On Catastrophic Risk Compensation Mechanism In China

In modern society, earthquakes, hurricanes, tsunamis, snow, drought and other kinds of natural disasters to human life and property caused enormous losses. China has many types of natural disasters, causing too much loss frequently and severely. In the 1900s, the loss of natural disasters have reached the level of hundreds of billions each year, impacting the economic and social development seriously. In recent years, as China's rapid economic social development, population and wealth increasingly concentrated, the loss caused by disasters was the trend of rapid growth. But in China the catastrophe risk management methods and tools is also very single. Compensation for catastrophic loss mainly is supported by national finance, while the proportion of insurance payments is very low. However, relying solely on national finance to transfer catastrophic risk is very limited. How to deal with the unexpected catastrophe, especially effective in reducing loss of life and property, the establishment of economic compensation mechanisms, fast recovery post-disaster economic and social activities, is an important issue.Developed countries to establish catastrophic risk insurance experience is successful. Maturity of catastrophic protection mechanism should be divided into three levels:the basis of the Government emergency response mechanism, the compensation mechanism for the insurance industry, charitable and other non-governmental aid. The Government generally responses in the rapid emergency level, the second largest compensation should be the insurance, civil assistance, and social knowledge play a complementary role in the rescue. However, facing a severe situation, our present catastrophe protection mechanism is the Government response firstly, mainly civil relief, insurance claims are in the most backward position.For our country, more efficiently compensation mechanism should be supported by government, establishing a common system of catastrophic risk, in order to against the disasters, which may bring huge economic losses, adverse social economic consequences, as well as financial risks. On one hand, it provide reasonable premium for catastrophe insurance products to reduce natural disasters caused by the economic risks; on the other hand, through the Catastrophe Fund to provide financial support for the affected poor people and critical infrastructure support to post-disaster reconstruction.