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Title: Regulation of reinsurance in Taiwan : developing an appropriate regulatory environment for maintaining the solvency of primary insurers
Author: Wang, Hsin-Chun
Awarding Body: Queen Mary, University of London
Current Institution: Queen Mary, University of London
Date of Award: 2002
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Unlike other financial services (e. g., services provided by a bank or a primary insurance company), reinsurers seldom deal with the consumers directly. This indirect relationship with the consumer results in the view that it is not necessary to regulate pure reinsurers to the same degree as primary insurers, because they deal only with other companies or individuals in the insurance business who are already subject to regulatory control. It is true that a reinsurer bears its own risk; however, if a reinsurer becomes insolvent or has not provided sufficient reserves to cover liability of payments, the stability of the primary insurer might be threatened and hence the interests of the insured parties. In the last decade or so, reinsurance markets have been dominated by a number of trends, which include an increase of the potential risk of liability of "longtail" catastrophe (e. g., earthquake, hurricane and flood) and significant uncollectible reinsurance recoverables due to legal disputes relating to contract liability. These factors have affected solvency margins of primary insurers. At the same time, there has been a rapidly growing concern respecting "finite risk" reinsurance and securitisation of insurance risk, which can be tailored more specifically to the needs of the insurers. With regard to emerging markets, reinsurance regulation currently tends to be based on local protectionism. This has impeded the diversification of insurance risk and has resulted in a shortage of capital capacity to cover further risks. In addition, trade barriers as to reinsurance have been gradually dismantled by the efforts undertaken by many international negotiations and organisations (e. g., WTO and OECD) in recent years. On the other hand, with insurance regulation being gradually built, internationally on a set of pro-competitive principles designed to ensure a competitive, solvent and fair market, the reinsurance market is becoming more competitive. In order to establish a sound and viable regulatory regime, emerging countries are seeking to implement regulatory reform based on several leading regulatory models which have been proved effective in developed countries (e. g., the UK and USA models). It is evident, however, that the attempts merely to copy the "readymade" law of industrialised countries will fail unless awareness of particular social, economic and legal differences are taken into account. The primary theme of this volume is that the traditional point of view that private reinsurers and reinsurance markets are not in need of governmental regulation is flawed. To the contrary, the reinsurers, reinsurance intermediaries and related reinsurance arrangements should be appropriately regulated to protect the solvency of primary insurers. Through comparative analysis of different sets of international regulatory principles and of experienced developed country models, this volume will develop and address these general regulatory issues. In order to provide and to enact a sound and viable regulatory system in emerging markets, however, such regulations should be adopted to suit the particular country circumstances and should not be imposed or copied en masse from existing models. In support of this proposition, the example of the Taiwanese reinsurance market will be used as a case study. Unless otherwise indicated, this volume speaks as of September 2001
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Law