The Study on Innovation of China’s Agricultural Catastrophe Risk Insurance Diversification Mechanism

SPEAKERS:FENG Xuefeng Jiangsu University

Leading principles

1. The necessity of the innovation of the study

2. Foreign experience of agricultural catastrophe risk diversification mechanism

3. The new ideas of the design of our agricultural catastrophic risk diversification mechanism

1.1 Frequent agricultural catastrophe and huge loss

YearDirect economic Losses (0.1 Billion Yuan)

Government relief Funds (0.1 Billion Yuan)

Percentage (%)

2001 1942.2 41.0 2.11

2002 1717.4 55.5 3.23

2003 1884.2 52.9 2.81

2004 1602.3 40.0 2.50

2005 2042.1 43.1 2.11

2006 2528.1 49.4 1.95

2007 2363.0 79.8 3.38

2008 11752.4 798.3 6.79

2009 2523.7 174.5 6.912010 southwest Drought

360.6 9.92 2.75

Table1 Catastrophe losses and financial disaster relief expenditure for the past 10 years

Source: "China Statistical Yearbook", China Civil Affairs Statistical reports, etc

1.2 The imperfect of Agricultural Catastrophe Risk diversification mechanism

1.2 The imperfect of Agricultural Catastrophe Risk diversification mechanism

Financial subsidies and the limitation of social assistance

Traditional catastrophe insurance and reinsurance limitations

a. The narrow coverage of agricultural insurance

b. Capability of the insurance is clearly insufficient

c. The immature reinsurance market and limited ability of spread risk

2. Foreign experience of agricultural catastrophe risk diversification mechanism

U.S.A.—A “single-track system” mode of market operation and government regulation

Mexico – an example of private/public partnership with individual participation

Japanese—A combinatorial mode of regional agricultural freemasonry

2.1 U.S.A.—A “single-track system” mode of market operation and government regulation

2.2 Mexico – an example of private/public partnership with individual participation

2.3 Japanese—A combinatorial mode of regional agricultural freemasonry

2.4 Summary

Some ideas and office procedure are as follows:

A. The private/public insurance partnerships is a key element for further market improvement

B. The government's two-way subsidies

C. The importance of the catastrophe funds

3.1 Building ideas of China’s mechanism

* government guided, business operated, financial supported, reinsurance and capital market supported

3. The new ideas of the design of our agricultural catastrophic risk diversification mechanism

3.2 Model selection and mechanism design

3.3 The advantages of agricultural catastrophe risk diversification mechanism

The government's two-way subsidies

The establishment of policy-oriented agricultural reinsurance company

The establishment of provincial and national catastrophe fund

Thank you！