The Research On The Life Insurance Industry Of China Based On The SCP Theory

Since the restoration of the life insurance business in China in 1982, China's life insurance industry has been developing rapidly, represented by a 30 percent average annual growth rate. While with the reform and opening-up of the life insurance market internally and externally, more and more entities in life insurance sector enter into the market, resulting in much intense competition and less market performance. As a result, the most important questions that China's life insurance industry is facing are how to optimize insurance market structure, improve market performance and strengthen the competitiveness of life insurers, which will directly influence the sound development of China's life insurance sector, too. In addition, few gigantic life insurers still remain leading and dominant position in the market, major life insurance business is highly concentrated and there is no explicit withdrawal policy of insurance entities. All the above questions come out much saliently at the trend of the life insurance market opening-up and the financial mixed operation. And the booming development of Chinese life insurance sector will face a hidden danger before all those questions are resolved. Therefore, it is a must to study, from the perspective of industrial organization, the existing questions in the fields of China's life insurance structure, behavior and performance and how to establish an effectual mechanism in China's life insurance market to ensure an effective competition and contribute to a healthy development. In this sense, this paper deserves an urgent study in current era, important theoretical value and realistic meaning.By picking the relations among China's life insurance market structure, market conduct and market performance as the research goal and analyzing the development process of China's life insurance sector and comparing it internationally, this paper makes sense of the relationship among China's life insurance market structure, market conduct and market performance in virtue of dialectical analysis, positive analysis and econometrics analysis, based on the traditional industrial organization theory and the new industrial organization theory.On the basis of traditional SCP analysis paradigm and the characteristics of China's life insurance industry, this paper establishes the amended inter-act SCP paradigm fit for the use of China life insurance sector. Meanwhile, this paper studies the market conduct of Chinese life insurance by means of Game Theoretic Model, makes a research on the relations among public performance, companies' performance and market structure of China's life insurance industry by linear regression and DEA methodology, and thus draws the following conclusions based on descriptive statistics and regression analysis:First, China's life insurers are continuously entering and market concentration is gradually decreasing since the break of the administrative monopoly of China's life insurance industry. The analysis shows that market structure of China's life insurance industry still belongs to the highest degree of monopoly type, which blocks the sector development and causes an uneven development at different regions.Second, China's life insurance market structure, market conduct and market performance form an inter-act relationship, which contributes to the fast and sound development of the life insurance. Fundamentally speaking, the source of the helpful inter-act relations among S, C and P lies in the change of market structure, which gives rise to the changes of market conduct and market performance, which then reacts market structure and further contributes to the promotion of market structure. Therefore, the inter-act relations among S, C and P, the promotion of market structure are the optimal factor, contributable to the rapid and steady development of China's life insurance industry.Third, from the perspective of macro market performance, market structure is the major factor affecting the public performance of China's life insurance industry, and market concentration has an obviously negative correlation with insurance density and insurance penetration. From the angle of micro market performance, China's life insurance industry is in line with the view of the efficient-structure hypothesis, namely, enterprises with high operation efficiency are quite profitable and can acquire larger market share during the competition with other entitiesFour, there are still many demerits in the market structure of China's life insurance industry and the optimization of market structure is beneficial for the development of China's life insurance industry. On the account, the industrial policy of life insurance should be aimed at further improving the market structure of life insurance industry, which possibly leads to the promotion of market conduct and market performance and accelerates the sounder and faster development of Chinese life insurance industry.Finally, this paper puts forward industrial organization policy proposals, contributable to the healthy development of China's life insurance sector, inclusive of increasing market entities, encouraging merger and acquisition among insurance market, more types of development models of life insurers, further opening up to the outside world, differentiated innovative behavior, strengthening self-disciplinary management and market regulation. The above proposals will theoretically help make up the shortcomings of the research into the area at home and abroad and promote the industrial organization theory in terms of China's life insurance sector. Practically speaking, those proposals are good for the formation of policy measures on improving an efficient competition and contributing to a sounder and faster development in China's life insurance industry.