Understanding the spatial development of the life insurance industry in post-reform China, 1999-2008

Abstract

The life insurance industry in China has experienced rapid growth and profound structural changes since the 1980s. Very much an intellectual topic indeed, the growth of the life insurance industry has received much academic attention from the economic and business perspectives. However, most if not all of the research conducted to date has been in the examination of the underlying reasons for the growth of the industry, while the comparison has been made usually on the national level. This research aims to contribute to a better understanding of the spatial distribution of the life insurance industry, an area in which most geographers are passionate. Acknowledging that market forces are major determinants of the growth of the life insurance industry, this dissertation strives to identify the pertinent spatial patterns and offer possible explanations of their variation among different China’s regions.

This thesis starts with a critical evaluation of the underlying reasons of the spatial demand for life insurance in post-reform China from 1999 to 2008. What follows is an investigation of the spatial behavior on the life insurers who are the service suppliers in response to the operating and regulatory environment. An empirical study of China’s three macro-regions is then conducted. Multiple regression and ANOVA analysis using the respective macro-economic and insurance data of the studied regions have been employed for hypothesis testing. Three research findings confirmed are statistically significant; first, the growth of the life insurance industry is positively correlated with the level of economic development of a region; second, a life insurer’s market share is positively correlated with its business infrastructure; and third, the institutional and regulatory environment has a direct and positive impact on the growth of a life insurer, as testified by the two case studies of a domestic and a foreign life insurer.

The research findings underscore the importance of both the market forces and the visible hand in determining the spatial development of China’s life insurance industry. Hopefully this study can shed some light on this research matter: for academicians and regional scientists alike to appreciate the contributing factors of the spatial distribution and variations of life insurance among different China regions; for business practitioners to appraise the underlying components of insurance supply and the relevant spatial attributes for office locations and expansion; and lastly for government officials and policy-makers to cross-question the merits of the current regulations in shaping the current life insurance landscape, and to devise the pertinent measures to alleviate the regional difference, if the approach of balanced development growth for the life insurance industry is the ultimate goal.