Comparative Research On Insurance Market Exit System In China

With over two decades' development, the insurance market in China has gone through the preliminary and disordered stage. However, it is still far from the safe zone. Too many participants joined in the market, no matter whether they are fully qualified. As far as the market capacity expands slowly, it is undoubted that the participants have to compete with each other to expand their territory. What's more, foreign insurance companies will step into this new market in a near future with the help of the WTO's treaties. Facing the competition from all aspects, every domestic insurance firm has to improve its management capability and be alert to the potential crisis. In order to be the winner in the long run, every company must make sure its products and services outbid its competitors.The U.S. Subprime Crisis taught a good lessen. The incredible financial disaster swept financial markets and industries in all developed countries and marked itself in the history. The recent bankruptcy of the Yamato Life Insurance Co. in Japan is another victim. It is impossible that a company will dominate in a market forever. Capital flows in all financial markets and ties them together in this new era. With the lasting development of financial services and derivatives, more opportunities to make profit are offered with unknown risks. Any financial institute, even a famous one, will fail if it chases the return without worrying about the embedded risk. Consequently, it is important to know how to maximize the return with the risk under control. In terms of the insurance market, an ordered supervision system is the key. Nonetheless, a more important one is how to build up an efficient insurance market exit system.By undertaking modern economics and finance theories, this paper studies the insurance exit system from normative and empirical directions together with marco-economic and micro-economic methods. The paper is organized as the following:Chapter 1 defines the "existence of the insurance market", clarifies the market participants and the exit styles, and builds up the theoretic foundation for the following chapters.Chapter 2 and 3 compare insurance exit systems in different countries and areas, representing the two main law systems in the world. Chapter 4 discusses the linked effect between the insurance market and other financial markets, the correlation between the insurance market entry and exit. It also provides an empirical model for the insurance broker exit and explores the possible factors and impacts of the market exit in China.Chapter 5 talks about the current situation and exiting problem in our insurance exit system and makes suggestions on the system improvement.The creative portions in this paper are as follows: Firstly, I proposed a theoretic foundation to discuss the insurance market exit system and hope to define the market exit in a broad way and a narrow one, which confirms the exit of the insurance companies are the major problem and also includes other participants' exits. Secondly, I studied the insurance exit cases from several countries and discussed the insurance market exit from the perspectives of the Common Law system and the Civil Law system. Thirdly, I explained the linked effect between the insurance market and other financial markets in terms of different insurance products for the very first time. Fourthly, based on the historical market exit data of insurance brokers in China, I built up the first quantitative model and found that the living conditions for insurance brokers are not good enough. Last not the least, I made a clear description of the insurance market exit situation in our country and gave some suggestions to improve our insurance market exit system.