Economic analysis of China´s reinsurance regulation policy

This paper investigates China´s reinsurance regulation´s necessity, measurement and efficiency by market price distortion, indirect regulation mode and Kaldor-Hicks Criterion respectively. We also provide a complete case study on 14-year development of China´s “Domestic Reinsurance Priority” provision which has be recently cancelled in “China Insurance Law (2009)” and “China Reinsurance Business Regulation (2010)”. The paper finally draws a conclusion that firstly reinsurance regulation policy should consider “social-economic welfare maximization” as the ultimate goal; Secondly, to measure the efficiency of reinsurance regulation policies, we should never be satisfied with the level of compulsory provisions; Thirdly, we should gradually adopt indirect regulation on the basis of direct mode by regulation experiences accumulation, especially for emerging countries.