A Research On The Correlation Between Market Structure And Market Performance In China Insurance Industry

Now, the problems of high market concentration, unruly market behaviors and low market performance exist in China insurance industry, which directly hinders the development of the industry. In order to solve these problems, the government and the companies both made great effort to enact statues and to adjust the policies. These measures need to be backed up by theoretical research. In another word, if these problems are to be solved, we must find the primary cause.The analysis in this thesis is based on the Model of SCP in Theory of Industrial Organization. Firstly, the author expatiates on the origin and main schools of Theory of Industrial Organization. Secondly, the conclusions of domestic and foreign research in the field of insurance industry is introduced and analyzed. And then, this thesis applies the Model of SCP to the insurance industry with my own innovation.These are firstly I analyze the correlation of market structure to market performance in the level of industry and company. Secondly, in the industry level the index of market performance is decided according to security function. Thirdly, in the company level the index of market performance is decided on behalf of shareholders. Fourthly, the technical efficiency is derived from the result of super efficiency in Data Envelope Analysis (DEA).On the base of research above, the author determines that the index of CR4 and HHI are the variables of market structure and the profit margin of industry and the reserve are the variables of market performance in the industry level while market share is the variable of market structure, technical efficiency is the variable of market performance in the company level. Then, I analyze the result which is worked out by Eviews5, and get the conclusion: the positive correlation between market share and technical efficiency is not significant; the opinion of Harvard school is not supported by the result of Life and Non-Life Insurance Industry.At last, I put forward some suggestions to the strategic decision of company and the policy of supervisor on the conclusion of calculation: in the life insurance industry market share should not be expanded blindly; the number of entry should be controlled and lead the market unit to compete fairly. In non-life insurance industry the market unit with high efficiency should be introduced to improve the extent of competition, at the same time, we must pay attention to the standardization of the competition.