Conceptual Proposal and Modeling of a Construction Surety Reinsurance Company with a Quasi-Public Function: Empirical Evidence from China

摘要

Currently, some developments have been made in Chinese surety area, especially in experimental cities. However, there are still many serious problems in this industry, such as opportunism and frequent bankruptcy of surety companies, which basically result from the lack of supervision and regulation of the construction surety market. At present, there is no clearly designated regulatory authority to govern the construction surety market in China. Based on these reasons, this paper innovatively proposes building a construction surety reinsurance company with a quasi-public function (CSRE) to achieve the governance of CSRE. Then this paper initially gives the definition of CSRE and states that CSRE should be operated under the low-profit mode with public interests. In order to verify the feasibility of its low-profit mode, a mathematical model has been built to analyze the optimal premium that guarantees CSRE's low-profit operation. Its validity has been proven in terms of the surety industry data in Shenzhen.