Study On The Reform Development Of China’s Insurance Regulation Evaluation Mechanism

China’s fast developing economy has created a favorable environment for thedevelopment China’s insurance industry. Insurance has now reached into every aspectof the country’s economy and its people’s lives. The thirty years’ development ofChina’s insurance industry witnesses the history of China’s insurance regulationreform. Being an important factor of market economy and an industry that deals inrisks, the sustainable and healthy development of the insurance industry needs theregulator to reasonably allocate resources to rectify market failure, which can helpsolve a series of problems, such as the monopoly of big conglomerates that are inmarket dominance, harms inflicted to consumers due to information asymmetry,industry-wide risks caused by external transmission effects as well as bad socialwelfare resultant from deficiency of public goods.In this paper, the author, through studying the public interest theory, the marketfailure theory and economic regulation theory, endeavors to first construct atheoretical basis for insurance regulation evaluation mechanism; through combingthrough the development of China’s insurance industry and insurance regulationhistory, an attempt is made to evaluate the effectiveness of China’s current insuranceregulation; drawing on experiences from major countries and international criteria forassessing the effectiveness of insurance regulation, the author also evaluates China’sinsurance regulation evaluation mechanism; last but not least, the problems of China’sinsurance regulation evaluation mechanism are analyzed and thoughts for reform andinnovation are proposed.China’s insurance regulation has gone through several stages: governmentaladministration, regulation in embryo and regulation in development. Throughinstitutional reform and reforms of regulation subject and regulation system, China’sinsurance regulation has specified clear regulation objective, set up unequivocalregulation principles, established clear-cut framework and imposed adequateregulation measures. So far, China Insurance Regulatory Commission along with its 35local branches has been established to create a regulatory network for theinsurance industry. A regulation framework has been established around threepillars--solvency regulation, management regulation and market behavior regulation.The core principles of regulation for the people, by the requirements of the law andimpartiality, by systematic measures and prudence as well as with pragmatism andefficiency have also been laid down as the institutional arrangement that covers topicssuch as market access, company management, solvency, market behavior andconsumer interests.China’s insurance industry has sustained good development momentum. In2013, insurance premium totaled1,720billion yuan, ranking fourth globally.Insurance assets totaled8,300billion yuan and profit reached99.14billion yuan,exhibiting a significant increase of competitiveness. The insurance industry hasplayed a considerable role in contributing to China’s economy growth, servicing thefinancial market, constructing a harmonious society and in partaking in the socialmanagement. Generally speaking, the objectives, principles, subjects and means ofinsurance regulation have been interacting with and supplementing each other.China’s insurance regulation has exerted its power in optimizing resource allocationand regulating market failure, thus, by and large, effective.The author has done in depth research into the history of insurance regulationand its evaluation mechanism in the United States, Britain and Japan and believes thatChina’s insurance regulation can benefit a from the mature insurance regulationlegislation and rigid regulation system in the United States, the solvency regulationand free market mechanism in Britain as well as the early awareness and progressivereform in Japan.Some limitations exist in China’s insurance regulation evaluation mechanism,such as the imbalance of institutional support, ambiguity of institution’s frameworkboundary and unsuitability of regulation development. Starting with reformingregulation system, regulation mechanism and regulation measures, step-by-stepinnovation shall be fostered to further stimulate the sustainable development of theindustry. The reform of regulation system shall focus on strengthening institutionalsupport, encouraging prospect of system arrangement and improving on theoreticalresearch; the reform of regulation mechanism shall have its emphasis on coordinatingthe relationship between regulation and market, regulation and service and regulationand innovation; the reform of regulation measures shall aim at increasing informatization level, effectiveness and authority of insurance regulation.