Abstract: During the process of financial marketization, banking insurance which is presented by the cooperation of life insurance companies and banks can be seen as a channel strategy of the life insurance companies. The main purpose of entering the banks is that the life insurance companies try to gain the scale effect from the “policy rent”. Thus the resulted clump-together of life insurance companies does not have the effects of industrial organization in the general sense: the strategy of differentiation, cost advantage strategy and decentralization strategy. Under the conditions of the cumulative growth of banking insurance business scale of life insurance companies and banks’ accelerating market-oriented reform process which lead to the dissipation of “policy rent”, the key for the sustainable development of banking insurance with life insurance companies“clump together”is to increase the non-policy input in banks by life insurance companies.

Key words: banking insurance; industrial organization; technology upgrade; policy rent