On Moral Hazard and It's Prevention in Agricultural Insurance of China

Since 2007, China's agricultural insurance has rapidly developed, and the collected premium has 20-fold increase, from 850 million RMB in 2006 to 17.4 billion RMB in 2011. But, the developing speed has slowed and fluctuated than that of expected in the past three years, especially livestock insurance, there are negative growth in 2009 and 2010, based on the heavy subsidies by governments. One of the important reason is the serious moral hazard cannot be hold back or within limits effectively. Some of these moral hazard problems both occur with the insured and insurer, and local governments. The main reason of the moral hazards is information asymmetry and the short of supervisory system, and local governments' cognitive gap with regard to agricultural insurance and so on. It is necessary to solve these problems throw many measurers, including legislative, supervisory public subsidies policies, micro operation and management of insurance company, famers learn the knowledge of insurance, so that promote its healthy and speed development of China's agricultural insurance with government financial support.