Introduction to Insurance Intermediaries

Author: Tang Yunxiang, Editor-in-Chief
Publisher:
Publishing Date: 2000-02-01
Features: ·A research outcome of the National Social Science Fund Project; ·A joint research result of the Central Party School of the Communist Party of China and the China Insurance Regulatory Commission; ·A designated reference textbook for the insurance agent, broker, and appraiser qualification examinations by the China Insurance Regulatory Commission.
Modern market economies operate and develop with finance at their core, and within the modern financial system, the insurance industry holds a pivotal position. This is not only because the development of market economies requires the insurance industry, as a crucial component of the financial system, to accelerate to meet the needs of market economy growth; but also because, under modern market economy conditions, market competition is becoming increasingly fierce, the rationality of market entities is continuously improving, and their preference for insurance is growing stronger. Objectively, this has driven the insurance industry to expand into deeper levels and broader spaces, increasingly demonstrating the advantages of industrialization and marketization.
Under modern economic conditions, development and cost, risk and insurance are intertwined. To reduce the costs and risks of development, it is essential to strengthen the insurance mechanism to disperse risks, alleviate the risk pressure on economic entities, and enhance the stability of development. In this sense, insurance serves as a stabilizer for economic development. However, as a massive demand market, the insurance industry does not form spontaneously. Its growth and expansion largely depend on various intermediary forms. Here, intermediaries act as accelerators for the market. From the practices of developed countries, the development of the insurance intermediary market is largely determined by the trends of intermediary industries. The general rule is that a vast insurance market requires a well-developed intermediary industry to sustain it.
With the continuous deepening of China's economic system reform and further opening-up, China's economy is integrating into global economic integration, and the Chinese insurance market will inevitably become an important part of the world insurance market. Developing China's insurance intermediary industry is a crucial task in establishing a mature Chinese insurance market that meets the requirements of a market economy and aligns with international practices.
The Chinese insurance market faces the insurance needs of billions of enterprises and hundreds of millions of households. As a vital economic compensation tool, the growth of the insurance industry should meet the demands of national economic growth. Research shows that the growth of insurance demand is closely linked to the overall improvement of the national economy, the rise in personal income, the rationalization of consumption, and the enhancement of personal education levels, all of which exhibit a positive correlation and increase proportionally. The changing insurance awareness is also evident. In China, purchasing insurance has been elevated to a new investment channel, becoming another hot topic in the financial sector after real estate and bonds. People are now closely concerned with the dynamics of the insurance industry. Thus, China's insurance demand represents a substantial potential market.
The increasing social penetration of insurance highlights the bridging role of insurance intermediaries, making a fully developed insurance intermediary industry an urgent priority for the growth of the insurance sector. Currently, China's insurance market has reached a preliminary scale, and the broader environment for the development of insurance intermediaries has taken shape. With economic growth, the proportion of insurance industry income in the gross national product generally tends to rise, and its growth rate is faster than the average of other industries. In recent years, China has successfully achieved a "soft landing" in its economy, maintaining low inflation and high development. The construction of China's infrastructure, particularly in power, energy, transportation, communications, aerospace, and finance, has provided broader opportunities and prospects, further solidifying the increasingly important role of the insurance industry and its intermediaries in economic development.
Innovation is the overarching trend of global economic development today, and we should adopt the same innovative spirit to study insurance intermediary industry policies, organizational systems of insurance intermediary institutions, and regulatory systems for insurance intermediary institutions. The innovation of insurance intermediary development has become the key to whether the insurance industry can maintain sustainable, stable, and healthy growth. Studying the insurance intermediary industry as an industry is both a theoretical innovation and a push for practical insurance intermediary practices. In fact, the development of insurance intermediaries has already shown industrialization trends. Therefore, studying the insurance intermediary industry as an industry is both a need driven by practical development and will undoubtedly provide new impetus to the evolving practices of insurance intermediaries.
At the same time, theoretical reflections on the insurance intermediary industry under China's socialist market economy provide the insurance theory with new contemporary connotations. As an integral part of establishing a socialist market economy system, both the insurance market and the insurance intermediary industry are in their early stages, both theoretically and practically, with many new issues requiring research and resolution.
The development of China's insurance industry shares general characteristics and patterns with insurance industry development under market economy conditions, but it also has many unique features. Since we are building a socialist market economy that combines socialism with market economy principles, there is significant room for research and exploration in China's insurance industry. On one hand, we must boldly explore and practice, taking active and effective measures to cultivate and expand China's insurance market and insurance intermediary industry. On the other hand, we must strengthen theoretical research, using the achievements of human civilization to guide our practices and create new insurance theories that align with China's realities.
As China's socialist market economy is still in the process of establishment and improvement, both the market system and market order need further refinement and regulation. Under such circumstances, the development of China's insurance industry lags behind and cannot meet the needs of market economy development. Especially for the newly emerging insurance intermediary industry, there are numerous practical issues, such as: unstandardized development, a high degree of blindness; incomplete management systems and regulatory mechanisms, lacking both policy norms and necessary constraints; unclear development direction, with neither long-term plans nor specific strategies; and low marketization levels. These issues severely hinder the healthy development of the insurance industry and require serious research and resolution.
Through research, we aim to: first, gain a comprehensive understanding of the current state of China's insurance intermediary industry development, identify existing problems, and propose targeted solutions; second, conduct in-depth studies on the mature experiences and theories of market economy countries, explore the establishment of insurance theories that fit China's realities, and apply them to China's insurance practices, formulating development strategies for the insurance intermediary industry.
To promote the development of China's insurance intermediary industry, in January 1999, the Central Party School of the Communist Party of China and the China Insurance Regulatory Commission jointly established the "Research Team on the Development of China's Insurance Intermediary Industry." This team organized renowned experts, professors, and scholars from institutions such as the Central University of Finance and Economics, Nankai University, Shanghai University of Finance and Economics, Wuhan University, China Insurance Company, China Life Insurance Company, China Pacific Insurance Company, and China Ping An Insurance Company to conduct a year-long study on insurance intermediaries. The project was listed as a National Social Science Fund Project in March 1999.
Building on the preliminary findings of the research, we invited scholars specializing in insurance studies to revise and refine the material multiple times, conduct three rounds of reviews, and revise the manuscript three times. The final version has been compiled into this popular textbook as a reference for professionals in the insurance intermediary industry, aiming to enhance expertise through dissemination. We hope this book will further improve the professional competence of those working in the insurance intermediary industry. We also hope it will provide theoretical guidance for the healthy and rapid development of China's insurance intermediary industry.