| The function of foreign insurance companies in domestic insurance market is a topic which policy makers are extremely concerned about. In the past three or four decades, the most common view is that a considerable degree of policy restrictions should be given to protect the stability of the domestic insurance market, even the entry of foreign insurance companies are not banned totally. Therefore, many countries limit the investment and operation of foreign insurance companies in a certain extent. Most countries’\insurance markets are mostly shown a monopolistic or oligopolistic structure. However, this situation is changing as more and more deepening of the liberalization of country’s financial reform. So far, there are more than70countries around the world achieving the free movement of capital. As the trade-related domestic microeconomic reforming, many countries have gradually opened the market for goods and financial service. The former often-criticized foreign direct investment is a warm pursuit today. Tariff and non-tariff trade barriers are gradually reduced, the joint-stock reform of state-owned enterprises and privatization of a deeper level, many governments relax the policy control of the financial sector, especially the insurance industry. However, the risks and drawbacks of this kind of financial liberalization cannot be ignored. For the not fully matured domestic market, especially for the financial services and insurance industries, foreign investment will bring a considerable degree of impact to the national economy.China as the emerging countries, the development of the life insurance industry is only about twenty years, which cannot communicate with the developed countries in Europe and the United States insurance industry of nearly a century history. However, since the recovery of the domestic life insurance business in China, industry is developing rapidly. The number of business entities and premium income continued to increase. The function of financial compensation, financial intermediation and social management continues to develop, which is playing an increasingly important role in socio-economic life. In2010,Chinese insurance market premium volume was ranked sixth in the world. Swiss Re insurance is expected that by2021, China will become the world’s second largest life insurance and non-life insurance market after the United States. The average annual premium increased from14.06billion Yuan in1999to1.137trillion Yuan in2009, with the average expansion rate of27%per year. With the continued growth of population and rapid economic development, China will become one of the world’s most important insurance markets. China has become the fastest growing region in global premium growth; the power of foreign capital could not be ignored. The foreign insurance industry develop earlier than us, and the overall mechanism is more perfect, and foreign insurance companies to operate in accordance with the requirements of its country, which is a strong demonstration effect for domestic companies. In addition to promote the perfection of Chinese insurance market competition mechanism, the foreign companies are also promoted the standardization of Chinese insurance industry objectively. At the end of2001, China has become one of the member of WTO, the insurance industry as the vanguard of the financial industry opened firstly to the outside world, committed to allowing foreign companies to smoothly enter the Chinese market. The specific measures including that allowing foreign life insurance companies set up branches or50%foreign owned company, canceling the business and geographical restrictions, and so on. The entry of foreign insurance companies has brought unprecedented effect, not only bring advanced technology and management experience to domestic insurance companies in underwriting, marketing, pricing, investment and other fields, but play a significant role in promoting the perfection of competition mechanism and the market regulation in Chinese life insurance market.In the context, the research makes a comprehensive use of theoretical analysis and empirical analysis, combining the quantitative analysis and qualitative analysis. Started from the theoretical analysis, the analysis of the current situation of foreign entry into China is to establish a theoretical support for the analysis of the effect of foreign entry to the life insurance industry. On the basis of qualitative analysis, statistical data are used to analysis the related research of the market structure, market conduct and market performance. Market structure, among the three angles of barriers to entry, market concentration and the degree of product differentiation three angles, deeply analysis the history of the evolution of the structure of China’s life insurance market and future trends; market behavior, the entry of foreign capital not only introduced advanced Western management ideas, business models and product development technology, but their sound management style promotes the rational behavior of the domestic life insurance companies to compete; market performance, from two parts of the industry level and company level effect, through the use of financial indicators analysis and multiple regression models, which providing a full analysis basis to the empirical conclusions. Finally, according to the actual operating status of China’s life insurance companies and the empirical analysis result of the foreign entry, this paper puts forward a few suggestions:based on our own national conditions, gradually adjust the limit of the stake proportion of the joint venture life insurance company; steadily progress the domestic life insurance companies to "go out" strategy; regulatory policy guide to gradually realize the balanced region development. |
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