Insurance In Financial Conglomeration

Insurance in financial conglomeration, in this paper, means not only insurance companies turn up to be conglomerates with diversification by a series of strategic operations, but also other financial institutions run insurance in a conglomerate. It is the progress and result of insurance integrate with other financial service, as well as an important part of finance integration. Study of insurance in financial conglomeration is to research the traditional insurance how to be integrated in a conglomerate.From the 80's of last century, with development of financial service, Financial Conglomeration come to be a tendency and conglomerates represent the core of the future competition. Financial Conglomerate means a various financial services provided by one company, and its appearance means special background and facts. Competition, technology promotion, globalization and deregulation are major reasons of conglomeration. Competition is the basic reason about conglomeration. Under highly competition, yield of single product reducing and risk rising, companies hope to revenue enhancement and cost saving by diversification service. Promotion of information and finance technology is another reason of conglomeration, which means the better management and the lower cost than ever, and which makes it is possible to manage the great deal of asset and provide the diversified service. The regulation changed, in globalization and deregulation, to be more efficiency-oriented, and reduce the limitation of competition. And new requirement to financial service also stimulates the conglomeration. Theoretically, the advantage of conglomeration can be argued by economies of scale, economies of scope and synergy, economies of scale means conglomerates can enhance revenue and save cost by expansion, as well as economies of scope means multiplication of service. Synergy makes conglomerates with several departments, which work in one institution, earns more than the aggregation of all department if they operate by themselves. And conglomeration also means patient risks and challenges of supervision.There are at least two steps to be a conglomerate, transformation andconsolidation, which also holds ture to insurance in financial conglomeration. Four methods of transformation, which are establishment, merger & acquisition, joint venture and alliance, are adaptable to different kinds of corporations and purpose. Establishment means the highest degree of consolidation and the longer time of operation, merger & acquisition is a fast way, but there are more difficulties of consolidation. Joint venture is advantaged to save cost and reduce risk, and it is always temporary method. Alliance is a loose and easy method without obvious effect. Comparison of these methods and data analysis is helpful to know transformation deeply.Conglomerate should be facing the problem of consolidation after transformation, including structure, management, operation and service. Structure of conglomerate, which is the reflection of operation strategy, is divided into four methods. Benefit and risk are most important of management and operation. Conglomerates should build up the management structure with core of benefit so as to be adapt to the changing environment. Business consolidation includes R&D, marketing and operation. All financial service is innovation of conglomerates, and the bundling of service is a good way of it. And it is necessary to systematically discuss bancassurance and assurfinance, because coalition between bank and insurance is most important part of insurance in financial conglomeration. In the beginning of consolidation, bancassurance is more effective than assurfinance.Insurance in financial conglomeration also developed in China. Alliance of selling develops very quickly and some companies have gone on the way of insurance in finance conglomeration, for example Ping'an Group and Citicgroup. Expatiating the status and analyzing special cases is the good way to think about its future. In future, finance holding company is the majo...