Abstract: Policy insurance is one of the important tools that can make national economy stable and promote social prosperity. Government giving corresponding subsidies to policy insurance can arouse the enthusiasm of commercial insurance agencies and policy-holder, increase the supply and demand of policy insurance, but in actual operation, the problem that commercial insurance agencies′ inefficient use of premium subsidies will happen. Through deconstructing the risk of policy insurance, this paper discusses the mechanism of policy insurance premium subsidies, and analyzes the problem of inefficient use of the premium subsidies. Research shows that the fundamental reasons of the lack of efficiency is the amount of actual premiums subsidies is more than that of government ought to assume, so determining reasonable premium subsidies and public proportion can effectively solve the problem of excessive premium subsidies; utility maximization and consumer equilibrium model can be used to determine the reasonable premium subsidies and the public proportion, which can provide theory support for government to formulate appropriate mechanism of commercial insurance agency selection and strengthen the related regulation to raise the use efficiency of policy insurance premiums subsidies.

Key words: policy insurance, premium subsidies, mechanism, use efficiency