A Study On Chinese Compulsory Insurance Management Difficulties And The Improvement Of Pricing Scheme

Vehicle Compulsory Traffic Accident Liability Insurance is an important part of China’s Insurance Industry. As the first compulsory insurance in our national, it plays an important role to spread risk and social management in people’s daily life and plays an irreplaceable role to our country’s economic development, especially for the social stability.With China’s rapid development of automobile industry and the increasing of residents’ income level, which provide a good condition for the development of the insurance business. However, with the increase number of motor vehicles, casualties caused by motor vehicles are also increasing. For the reason of driver’s different economic level, victims cannot be compensated timely and effectively. In view of this, China in2006launched the compulsory insurance system to safeguard the legitimate rights and interests of victims in traffic accidents. However, due to the imperfect development of China’s insurance industry, since the implementation of compulsory insurance, this insurance business has been losing money. At the end of2012, compulsory insurance business accumulated losses reached25.6billion. The main reason is the contradiction between same charges with continual rising social and economic costs, as well as slowly insurance industry technology upgrade. As the first compulsory insurance in our national, Compulsory insurance has an important referential significance to carry out other types of insurance. The current business situation of successive loss will reduce the enthusiasm of insurance business, thus affecting the quality of service, which is not conducive to play the role of maintaining social stability. Therefore, study on the influencing factors of the compulsory insurance and provide sound and practical advice has positive theoretical and practical significance.The main contents of this paper are as follows:First, this paper expounds the research background and research significance, summered the research ideas, and pointed out the innovation and deficiency. Second, this paper elaborated the development of domestic and foreign insurance, analysis the operation of China’s compulsory insurance. The United States and Europe have legal basis and mature management technology to guarantee the operation of compulsory insurance. Japan and Hong Kong cross strong insurance products are mainly in traffic accidents, casualties of security.This helps achieve the purpose that provides the basic guarantee for victims who damage the health of life in traffic acci dents. Through analysis on compulsory insurance business, we see that underwriting income is negative; investment income is low and high cost. Again, this paper analyzes different level of China’s Compulsory Insurance operating losses. It turns out the going rate pricing scheme is not precise enough, the social and economic environment is not comfortable, the management level of insurance industry is not high and so on, these factors have led to China’s compulsory insurance losses. Finally, this paper provides suggestions and feasible measures for compulsory insurance, and tries to design a new pricing scheme. Recommendations are as follows:By adding a variety of factors to establish new pricing plan, promote its early access to "break even"; Insurance industry should understand the management problems of its own, and cooperate with supervision department so as to industrial upgrading; As to Macroeconomic policy, the government should be combined with the actual so as to establish flexible taxation mechanism and sound judicial environment to promote its development.