The Research On The Formation Mechanism Of Insurance Industry Procvclicality And The Counter-cyclical Regulation

With the explosion of the financial crisis, procyclicality of the financial system leadsto cyclical economic fluctuation and has enormous influence on the financial and economicstability.Based on the procyclicality of the financial system, the international organization andexperts believe that the macro prudential regulation on temporal dimension should be taken.On the one hand, we need to adopt measures to ease the procyclicality of solvencyregulation, fair value and reverse accounting. On the other hand, introducingcontra-cyclical policy regulation instruments and establishing contra-cyclical regulationmechanism in order to prevent the procyclicality of the financial system lead to cyclicaleconomic fluctuation. The instruments of contra-cyclical policy regulation includecontra-cyclical capital buffer, more prospective provision rules, index leverage, pressuretest and improving accounting standards of the fair value, and so on.We have deeply confronted with the harm points that the procyclicality of thefinancial system taking to the financial and economic stability, and measures to ease theprocyclicality is necessary to adopted. As an essential part of the financial system,insurance industry also has procyclicality. It has important meaning to discuss and analyzethe formation mechanism of insurance industry procyclicality and the counter-cyclicalregulation on insurance industry stability and healthy development.Firstly, this article defines the concept of insurance industry procyclicality, by usingtheoretical analysis and international comparison method, some insurance regulationtheories are summarized，including market failure theory, public interest theory andtheories of institutional economics, then basing on this analyzes the formation mechanismof insurance industry procyclicality; Secondly, this article analyzes the insurancecounter-cyclical regulation experiences in different countries, including the USA, Germany,French and Japan; in the end, based on the influence of insurance industry procyclicality,this article summarizes the successful experiences of developed countries, and putsforward some policy suggestions about the insurance counter-cyclical regulation.