Issues and Countermeasures in the Development of Domestic Liability Insurance in China from a Law and Economics Perspective

Domestic liability insurance, as an emerging type of insurance, has emerged alongside the rapid growth of China’s domestic service industry. It aims to provide comprehensive protection for the rights and interests for domestic workers, domestic service enterprises and employers. As the domestic service industry continues to expand, the risk of accidental injury and property damage faced by service personnel are increasing, highlighting the growth necessity of domestic liability insurance. From a law and economics perspective, this paper conducts a preliminary and systematic exploration of the development of domestic liability insurance in China. it begins by reviewing its development path and unique features, using Shanghai’ s domestic service industry as a case study to illustrate its vital role in risk management and liability compensation. This paper provides a detailed analysis of key elements such as the current market landscape, insurance participation, product diversity, and coverage scope. While recognizing favorable conditions for the growth of this insurance sector, the study also identifies significant issues, including supply-demand imbalances and the lack of diversified insurance products. Using the theoretical framework of law and economics, the paper delves into the economic motivations and influencing factors behind the development of domestic liability insurance. Drawing on international experience, it proposes practical countermeasures to address these challenges. The goal of this paper is to provide useful reference and guidance for the sustainable development of China􀆳s domestic liability insurance and to support the domestic service industry in evolving towards greater maturity and effectiveness.