Chapter 6 Conclusions
6.2 Recommendations
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and mainly on the coastal regions. The limitation on overseas property insurers has blocked the development and the critical motor insurance market is still controlled by the domestic insurers due to the restrictions of compulsory third-party liability auto coverage.
4. The Legal Environment Improves Gradually
The legal structure and official supervision have been established and the government tries to remove the limitations slowly but surely. However, it has some boundaries for the foreign coming investors and cannot fulfill the aim of free market and competition. The financial crisis has also spurred the CIRC to rethink insurance supervision. Many of the steps are taken to strengthen the industry by improving transparency. Besides, the government is liberalizing limitations on insurance investment and regulations are improved.
5. The Growing Development is Expected and Lead to Intense Competitiveness All in all, compared to the past, the growth of China’s property insurance business has been impressive. Bancassurance will become more and more critical and these new bank-owned bancassurers will introduce new dynamics in the market. The competition among property insurance companies will become more intense, it is important for property insurers to develop telesales and Internet sales. China property insurance industry has entered rapid development period, and operation model of property insurance industry is developing toward diversification. The future prospect of China insurance industry development will be very good.
6.2 Recommendations
This research has shown both the current property insurance market development and the potentiality in the future. After the aforementioned conclusions, we would like to make some suggestions as follows:
1. Develop Sound Regulatory Framework
Regulators, through market enabling policies and reforms, have a critical role in further developing the property insurance market. At the same time, balance required to be maintained since over-regulation leans to enlarge costs and operational obstacles.
An efficient legislative system also requires unified principles such as democracy, transparency and fairness for making regulations. The system regarding withdrawing from the market should be set up to eliminate the companies with bad performance.
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Also, it is necessary to review existing laws, regulations and rules, which are inconsistent with the market economy, and making the new ones to meet the needs of real life. All of these efforts make the regulations become more efficient, more useful and more prompt.
2. Ease Barriers and Develop an Efficient Market
A level playing field will lead to increased participation and innovation practices finally benefit consumers. It is very important for the government to remove the obstacles and improve an efficient market that encourages innovation and competition.
The rate deregulation is also a key point to enhance the underwriting and actuarial ability of the property insurers, and China should take some steps to remove the rate limitations.
3. Reduce Administrative Approval
Administrative approval was a key regulatory measure in the developing country.
However, the existence of too many administrative approvals has been an obstruction for the economic development because these approvals formed unreasonable trade limitations and heavy burdens to the enterprises and traders. The government should abandon traditional management methods that interfere directly in social and economic activities. With the reduction of administrative approval, it can decrease the administrative cost and increase the competitiveness of property insurance industry.
4. Increase Insurance Awareness and Ensure Consumer Protection
By increasing insurance awareness among the population and enterprises, the insurance potential need will be developed. The action can help prevent the moral risk occur and increase the insurance integrity. Property insurance companies can help educate the customers by promoting the products or offering more insurance information to the clients. Also, the governments can improve the insurance education and assist the property insurers to build a market for demand-driven property insurance products.
5. Promote Product Innovations
By offering new insurance products, China's property insurance business will be improved. Product innovations can lead the potential need of property insurance products to be satisfied, especially in the areas of the family property insurance and liability property insurance products. Besides, the property insurers can provide the related insurance services with product innovation, such as the solution project while the policyholders meet the events or risks.
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6. Improve Risk Management
Property insurers with excellent investment and risk management capabilities will have a critical competitive advantage. This will enable some companies to come out as industry leaders. With the growing ability of risk management, the competitiveness of property insurance industry will be improved and also the interests of the insurant will be protected completely.
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