Essays on Improving the Regulation and Supervision of Insurance in PR China

Abstract

This thesis consists of six chapters dealing with several issues related to the common theme of improving the insurance regulation and supervision in China based on China's realities and experience drawn from some selected regimes. Chapter I provides an overview of China! s insurance industry and its regulatory framework with an aim at providing a platform for deeper discussions in the following chapters. In particular, it reviews the 2002 revision of PRC Insurance Law. Chapter 2 critically examines the liberalisation process, competition issues and relevant legal framework in China's insurance sector in the context of the WTO accession and the international convergence of regulatory standards and practices. Chapter 3 examines how China's insurance regulation and supervision can be effectively and efficiently improved by the implementation of market-based approaches, shifling some of responsibilities for supervision onto insurance firms and the insurance industry through greater corporate governance, active self-rcgulation by the industry, and reinforced insurers' transparency. Chapter 4 addresses issues on the restructuring of China's insurance prudential regulation and supervision from four sides: the inefficiency of solvency management existing in the insurance industry, the framework of prudential regulation, the upgrade of early warning system, and the need to establish policyholder protection funds. Chapter 5 demonstrates the urgent needs for both relaxing restrictions on insurers' investment and improving investment regulation, and discusses a set of regulatory measures that would both facilitate insurers' effective portfolio management and safeguard the soundness of the insurance sector. Chapter 6 examines rate regulation and impacts of rate deregulation in China's nonlife insurance markets, focusing on auto insurance as a typical case. By drawing experience from the rate regulation in the US property and casualty insurance, it shows that China needs certain legal environment to escort a gradual liberalisation of rate control.