Discussion Of Establishing Earthquake Insurance Of Family Property In China

Surrounded by Pacific Ring of Fire and Eurasia seismic zone, China is one of the countries that have been affected by earthquakes most intensively and severely in the world. These days, the compensation for suffering the loss caused by the earthquake, especially the property damage, is mainly supplied by National financial expenditure, as well as be complementary with charity activities like private donations, international donors and rescue. Historically, the central government of China takes the whole responsibility for disaster relief and compensation in a planning economy way. In the modern environment of market-oriented economy, however, the old way has been proved limited and ineffective in most case. Since compensation to the families suffering loss due to natural disasters is directly influence the people's living especially in a country which has been suffered from earthquakes frequently, it is urgent to establish a management system to take control of earthquake insurance of family property, to make sure that the loss of family property will be covered by compensation in time. Risk resolution has four basic forms including risk assumption, risk reduction, risk diversion and risk evasion. As a natural disaster, earthquake rarely happens but has great damage. People can hardly avoid earthquake or cover the loss in earthquake all by themselves. Insurance, as the main way of risk diversion, is adaptable in this case. The earthquake insurance of family property can provide valuable functions such as risk control, recovery of loss, fiscal buffers, financing and mental guarantee.Japan has established a relatively complete system of earthquake insurance as well as New Zealand and California, US. There are some similarities in these earthquake insurance system which are worth using for reference for China as follows: legal system as basic, government in a leading role, establishing core institution and multilevel risk sharing system, raising money for insurance fund and setting reasonable standard rate, to make sure the basic protection.China has never developed earthquake insurance system since 1949. As for whether the earthquake should be included in property insurance liability, there has been some arguments. Recently, the prohibition of developing earthquake insurance of family property has been canceled and several insurance companies has already explored in this field. Yet the reason why the earthquake insurance of family property develops so slowly in China is the lack of earthquake insurance rules. Now that the micro-environment and macro-environment has already changed, the establishing of earthquake insurance of family property is becoming a realistic project.The establishing of earthquake insurance of family property in China should be carefully considered according to the development of China's economy and the insurance industry, as well as the traditional way of disaster relief and the country's geographical condition. The process should be gradually carried out with concern of people's demand and risk sharing. As for the specific arrangement, it is necessary to make China's Earthquake Insurance Law and its detailed implementation guidelines, then to establish the system of earthquake insurance system overall, to raise money for insurance fund, to make insurance products and to product a multilevel risk sharing system.Because of the limited data materials and the lack of professional skills, research methods and experience, this paper presents some thoughts about establishing earthquake of family property in China yet not deep enough to develop a complete system, which is expected to be improved in future research.