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
Table1 Catastrophe losses and financial disaster relief expenditure for the past 10 years
2001
Direct economic
Government relief
Percentage (%)
Losses (0.1 Billion Yuan) Funds (0.1 Billion Yuan)
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
174.5
6.91
9.92
2.75
Year
2009
2523.7
2010 southwest
360.6
Drought
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. The new ideas of the design of our agricultural
catastrophic risk diversification mechanism
3.1 Building ideas of China’s mechanism
Economic
situation
Foreign experience
Government
guidelines
China’s Decentralized model*
* government guided, business operated, financial supported, reinsurance and
capital market supported
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！