The Study On Life Insurance Industry In China On The Basis Of SCP Paradigm

Since China recovered life insurance from1982, the inland life insurance market wasmonopolized by PICC (People’s Insurance Company of China), and the life insurance wasunified manage with property insurance. The inland life insurance market had graduallyintroduced competition mechanisms after1991. And the market structure type transformedfrom complete monopoly to oligopoly, and then proceeded to monopolistic competition.Therefore the market concentration gradually died down. The degree of openness of china’slife insurance market has been deeper and deeper since china joined WTO (World TradeOrganizing) in2001. More and more foreign life insurance companies enter to china’s lifeinsurance market in foreign capital or Sino-foreign joint ventures forms. And now the quantityof life insurance companies has exceeded60including more than40percent foreign andSino-foreign capital with the result of fierce competition.The market fixed price of life insurance products was becoming lower and lower due tothe intensifying competition. The species and quantity of life insurance products wasincreasing. Participating life insurance, investment-linked life insurance and universal lifeinsurance and other kinds of life insurance products were accepted by the market. Thevariation of demands was in urgent need of continuous innovation on life insurance products.It has become a big challenge for the life insurance companies to innovate the products.Meanwhile the operating costs of life insurance enterprise were highly improved by the fiercemarket competition. Therefore some of the life insurance companies with low innovationability were washed out by the market. And the increasing operating costs and the decreasingmarket fixed price of life insurance products leads to profit squeeze in life insurance industry.The market performance decreases.According to the traditional industrial organization theory, the market structure has anaffect on market conduct in short order, and then affect market performance. While the affectamong the market structure, conduct and performance is mutual so that to reach long-termequilibrium. So, what kind of response will the market conduct have with regard to thechange of the market structure of life insurance industry in our country? And what affect willhave on the market performance? To solve this problem, the thesis will study on the lifeinsurance industry emphasis on the ten years since china joined WTO combining with thephysical situation of the life insurance industry in our country applying the industrialorganization theory. The thesis will analyze the market structure, conduct and performance ofthe life insurance industry in our country, and will discuss the interaction relationship amongthe triadic relation comparing with the foreign mature life insurance markets, aiming at coming up with some reasonable policy suggestions which are appropriate for China’s lifeinsurance industry.