Expansion Of The Size Of China's Insurance Industry And The Solvency Constraint

This dissertation extends the Powers and Shubik strategic insurance market game model by considering China's insurance market conditions, and studies the scale expansion and solvency restriction in China's insurance industry from an empirical perspective. Firstly, this dissertation has established an analytical framework focusing on solvency restriction by applying the Powers and Shubik strategic insurance market game model. Under this analytical framework, we can study the effects of the number of insurers, customers and total invested capital to insurance price, total quantity purchased, average quantity purchased, customer's payoff and insurer's payoff, in different solvency restrictions (). Secondly, this dissertation extends the Powers and Shubik strategic insurance market game model from three directions, number of insurers, number of customers and total invested capital, by considering China's insurance market conditions. We study the effect of number of insurers, number of customers and total invested capital to the market equilibrium, under different solvency restrictions. We use computer program to stimulate the model extensions and examine fifteen relationships. We examine the relationship between number of insurers and price of insurance per exposure unit, number of insurers and total quantity of insurance purchased, number of insurers and average quantity of insurance purchased by one customer, number of insurers and customer's payoff, number of insurers and insurer's payoff; number of customers and price of insurance per exposure unit, number of customers and total quantity of insurance purchased, number of customers and average quantity of insurance purchased by one customer, number of customers and customer's payoff, number of insurers and insurer's payoff; total invested capital and price of insurance per exposure unit, total invested capital and total quantity of insurance purchased, total invested capital and average quantity of insurance purchased by one customer, total invested capital and customer's payoff, number of insurers and insurer's payoff, in different solvency restriction conditions(；；；；). Thirdly, this dissertation examines the crisis of the Japanese insurance industry as an international case study. We examine the source that causing the Japanese insurance crisis after years of expansion in scale. In this dissertation we find that the Japanese insurancecrisis is an unavoidable result of inordinate scale expansion. Using solvency restriction to adjust the market step is the key to avoid crisis similar to Japan. Fourthly, this dissertation studies the market structure and efficiency of China's insurance market empirically. We use microeconomics analysis method to estimate revenue efficiency and cost efficiency using financial data of Chinese insurance companies. We compare efficiency between large insurance companies and small insurance companies, and between composite (business diversified) insurance companies and specialized (business focused) insurance companies. We find that the behavior of large insurance companies (mainly state owned enterprises) was not fully competitive as compared to the behavior of small insurance companies, and composite insurance companies showed much more competitiveness than specialized insurance companies in China. This dissertation finds that the scale expansion of China's insurance market is inefficient and primitive, and it is at the cost of insurers' solvency. Fifthly, this dissertation examines the scale and solvency of China's insurance industry in three perspectives such as number of insurers, number of customers and total invested capital, by using the extensions of Powers and Shubik strategic insurance market game model and using the Japanese lessons as a reference. Finally, the conclusions of this dissertation provide directions for the insurance policy makers to adjust the market. According to the conclusions of this dissertation, the insurance policy makers can achieve special publ...