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Are People Willing to Buy Natural Disaster Insurance in China? Risk Awareness, Insurance Acceptance, and Willingness to Pay

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Listed:
  • Ming Wang
  • Chuan Liao
  • Saini Yang
  • Weiting Zhao
  • Min Liu
  • Peijun Shi
Abstract
After the Wenchuan earthquake (magnitude 7.9, May 12, 2008), intensive debates on how China should establish a natural disaster insurance system were initiated among researchers, policymakers, and insurance professionals. Our focus was the social aspects of disaster insurance, explored in China through a nationwide survey. Our questionnaires investigated people's risk awareness, insurance acceptance, their opinions on governmental measures for disaster management, and their willingness to pay for disaster house insurance. We analyzed the results at both regional and individual scales. We found that the integrated hazard index and respondents’ experience of insurance (considered objective factors), and their opinions on the importance of insurance and government responsibility (considered subjective factors) showed strong correlation with the regional overall acceptance of disaster insurance. An individual's decision to participate highly depended on his/her experience of both insurance and disaster and his/her opinion on the importance of insurance as a coping mechanism. Respondents from poverty‐stricken or less‐developed counties were not necessarily more reluctant to accept natural disaster insurance, though they exhibited relatively lower ability to afford insurance. In general, respondents had correct perceptions of natural disasters in their areas; however, people from regions with a greater multihazard threat showed less willingness to accept disaster insurance because they tended to expect the government to undertake to cover losses and considered insurance to be less important. People's willingness to pay for an assumed disaster house insurance was also investigated and analyzed. We consequently discuss the policy implications for developing a disaster insurance system in China.

Suggested Citation

  • Ming Wang & Chuan Liao & Saini Yang & Weiting Zhao & Min Liu & Peijun Shi, 2012. "Are People Willing to Buy Natural Disaster Insurance in China? Risk Awareness, Insurance Acceptance, and Willingness to Pay," Risk Analysis, John Wiley & Sons, vol. 32(10), pages 1717-1740, October.
    • Handle: RePEc:wly:riskan:v:32:y:2012:i:10:p:1717-1740
    DOI: 10.1111/j.1539-6924.2012.01797.x
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    References listed on IDEAS

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    2. Xueling Bao & Fengwan Zhang & Xin Deng & Dingde Xu, 2021. "Can Trust Motivate Farmers to Purchase Natural Disaster Insurance? Evidence from Earthquake-Stricken Areas of Sichuan, China," Agriculture, MDPI, vol. 11(8), pages 1-15, August.
    3. Chuan Liao & Patrick J. Sullivan & Christopher B. Barrett & Karim‐Aly S. Kassam, 2014. "Socioenvironmental Threats to Pastoral Livelihoods: Risk Perceptions in the Altay and Tianshan Mountains of Xinjiang, China," Risk Analysis, John Wiley & Sons, vol. 34(4), pages 640-655, April.
    4. Darko Blazhevski, 2019. "The Role Of Public Private Partnership In Developing Catastrophe Insurance Market," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 17(2), pages 55-66, November.
    5. Ye Yuan & Ming Li & Congshan Tian & Yun Xu, 2023. "Measurements and Influencing Factors of New Rural Collective Economies’ Resilience toward Mountain Disasters in Indigent Areas: A Case Study of Liangshan Yi Autonomous Prefecture, China," Land, MDPI, vol. 12(11), pages 1-22, November.
    6. Seoyong Kim & Seol A. Kwon & Jae Eun Lee & Byeong-Cheol Ahn & Ju Ho Lee & Chen An & Keiko Kitagawa & Dohyeong Kim & Jaesun Wang, 2020. "Analyzing the Role of Resource Factors in Citizens’ Intention to Pay for and Participate in Disaster Management," Sustainability, MDPI, vol. 12(8), pages 1-25, April.
    7. Dingde Xu & Enlai Liu & Xuxi Wang & Hong Tang & Shaoquan Liu, 2018. "Rural Households’ Livelihood Capital, Risk Perception, and Willingness to Purchase Earthquake Disaster Insurance: Evidence from Southwestern China," IJERPH, MDPI, vol. 15(7), pages 1-19, June.
    8. Hott, Christian & Tran, Thi Xuyen, 2020. "NatCats and Insurance in a Developing Economy - New Theoretical and Empirical Evidence," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224551, Verein für Socialpolitik / German Economic Association.
    9. Fabrizio Terenzio Gizzi & Jonghun Kam & Donatella Porrini, 2020. "Time windows of opportunities to fight earthquake under-insurance: evidence from Google Trends," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-11, December.
    10. Tao Ye & Yangbin Liu & Jiwei Wang & Ming Wang & Peijun Shi, 2017. "Farmers’ crop insurance perception and participation decisions: empirical evidence from Hunan, China," Journal of Risk Research, Taylor & Francis Journals, vol. 20(5), pages 664-677, May.
    11. Hao Guo & Yaoyao Wu & Yanrui Shang & Hao Yu & Jing’ai Wang, 2019. "Quantifying Farmers’ Initiatives and Capacity to Cope with Drought: A Case Study of Xinghe County in Semi-Arid China," Sustainability, MDPI, vol. 11(7), pages 1-19, March.
    12. Daewoung Choi & Hyunju Shin & Kyoungmi Kim, 2023. "CEO’s Childhood Experience of Natural Disaster and CSR Activities," Journal of Business Ethics, Springer, vol. 188(2), pages 281-306, November.
    13. Pauline Avril & Gregory Levieuge & Camelia Turcu, 2023. "Do bankers want their umbrellas back when it rains? Evidence from typhoons in China," Working Papers 2023.08, International Network for Economic Research - INFER.
    14. Peter John Robinson & W. J. Wouter Botzen, 2023. "Can we nudge insurance demand by bundling natural disaster risks with other risks?," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 7(2), pages 39-46, December.
    15. Aloysius Gunadi Brata & Henri L. F. de Groot & Piet Rietveld & Budy P. Resosudarmo & Wouter Zant, 2021. "Resilience toward Volcanic Eruptions: Risk Perception and Disaster Microinsurance in Yogyakarta, Indonesia," Sustainability, MDPI, vol. 13(16), pages 1-16, August.
    16. Yaoyao Wu & Hao Guo & Jing’ai Wang, 2018. "Quantifying the Similarity in Perceptions of Multiple Stakeholders in Dingcheng, China, on Agricultural Drought Risk Governance," Sustainability, MDPI, vol. 10(9), pages 1-21, September.

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