Cross-strait Life Insurance Industry Comparative Study

Life insurance as an integral part of the insurance industry plays an important role in social stability and people's healthy protection. The Mainland developed rapidly after 30 years of reform, and Taiwan's insurance industry is relatively more mature because of its unique political and historical reasons. Although theories on the Mainland's insurance industry organization have become more sophisticated, perhaps the reason of theorists has always been confined to the domestic perspective, analysis is still inadequate. This paper tries to compare the life insurance industry is mainland and Taiwan Life Insurance to compare the Mainland's relative backward life insurance industrial structure with Taiwan's Iife insurance industrial structure to find the differences aspects and the same aspects between them. Furthermore, we can also find the reasons of why the two regions'life insurance performance plays different. And the end of the paper, based on the Mainland's perspective, gives some suggestions for the future development of the Mainland's life insurance.At the research framework and path, the paper, based on empirical research, firstly introduce the life insurance industry's basic characteristics of the two regions. And then the paper use SCP paradigm to analysis the collected materials. For further research, the paper establishes a market structure and performance empirical analysis of the equation model to understand the cross-strait life insurance industry.This paper is divided into five chapters:Chapter 1 is an introduction part. First it introduces the research background and significances, followed by the framework of this study, the content and innovation are also described. At last, the scope of this study associated with the data source is introduced. Chapter 2 is the theoretical foundation and literature review. In this chapter, it introduces the theoretical basis of this study and previous studies made on this and empirical literature. In the theoretical basis part, it first introduces the different schools of thought on the relationship between market structure and performance point of view, which highlights the Harvard School of SCP view. Second, market structure and performance of the analytical framework are explained. At the part of the literature review, the paper introduces the Mainland and Taiwan's insurance industry industrial organization literature respectively. At last the paper gives its comments of the literature review. Chapter 3 is comparative analysis of cross-strait life insurance industry. This chapter analysis the related life insurance industries from the following three aspects on both sides of the qualitative:first is to introduce the life insurance industry's characteristics; Second it compares the Mainland and Taiwan life insurance industry's business environment. Third, it uses the SCP paradigm to compare the cross-strait industrial organization features of life insurance industry. Chapter 4 is the empirical model analysis on market structure and performance relationship in the Mainland and Taiwan's life insurance industry. This chapter is divided into three parts:market structure and performance of the derived theoretical model, empirical model and empirical results of comparative analysis. In the first part, Cowling & Waterson model is derived. Second part, the empirical model is constructed, and it definite and descript the model variables; In the third part, it regress the of the date of the Mainland and Taiwan's respectively 20 companies from 2005 to 2009. The regression results are obtained, and the regression results are analyzed and explained. Chapter 5 is the main conclusions and suggestions.The conclusion obtained from the empirical model is:the Mainland life insurance's market share (MS) shows a positive correlation with business performance, in line with Bain's "market structure-performance" hypothesis. But the market concentration (CR) shows a negative correlation with business performance. This illustrate that the Mainland life insurance's market structure gives an impact to the industry's business performance. The life insurance's market share (MS) and market concentration (CR) in Taiwan both with no significant performance relations, does not meet the Bain's "market structure-performance" hypothesis. Although the evidence shows the Mainland's life insurance's market performance plays better than its in Taiwan, it does not mean that the life insurance industry structure in Mainland better than its in Taiwan. The improving of the Mainland life insurance's market performance is not driven by business revenue growth, but by the investment income which brought from the prosperity capital market. If the Mainland's capital market bubble burst, the life insurance's investment income will be significantly reduced, that will greatly affect the life insurance industry's market performance. So, if the Mainland wants to fundament enhance the market performance of the life insurance industry, it must improve its market share to change the unreasonable oligopoly competition situation.The paper's two new views:first, the empirical research on both the Mainland and Taiwan's life insurance industry. It use quantitative measurement to compare the Mainland and Taiwan's life insurance industrial structure and performance. Second, this paper put forward relevant proposals on the life insurance industry of the Mainland based on the comparison results of empirical research.