The Law and Economics of Mutual Fishery Insurance in China
This lecture is part of Prof. Schäfer's ring lecture "New Frontiers in Law and Economics".
In China the fishery sector is of great economic importance, but at the same time fishermen are exposed to large potential losses. Bad weather events (hurricanes, typhoons) can expose the fishermen to serious risks, causing personal injury (even many losses of lives), but also huge economic losses.
Originally, China tried to deal with compensation for these adverse events via commercial insurance, but that turned out to be a huge failure: due to problems of adverse selection premium incomes were low and losses were huge, as a result of which it turned out to be uninsurable.
Then, stimulated by the local governments in the various coastal provinces, a model of mutual insurance was created. It is a type of risk-sharing agreement with variations between the different Chinese provinces and with partial government intervention. This mutual insurance model now functions already for several years and seems at least to be able to provide decent coverage for most of the catastrophic losses.
Together with student Jiang Minzhen Prof. Dr. Michael G. Faure, Professor of Comparative and International Environmental Law amd Academic Director of Ius Commune Research School, Maastricht University, has analyzed this mutual fishery insurance in China from a law and economics perspective, addressed some of the critical features and also provided a critical analysis of the government intervention in that fisheries mutual insurance market.
The ring lecture takes places every Tuesday at 5.30 pm.
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