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Preferences for earthquake insurance in rural China: factors influencing individuals’ willingness to pay

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  • Ling Tian
  • Peng Yao

Abstract

In 2014, China piloted its first earthquake insurance program, and the inhabitants’ demand for earthquake insurance is significant for the implementation of this plan. This study aims to identify the willingness to insure (WTI) and willingness to pay (WTP) for earthquake insurance and their influencing factors. A field survey was carried out in 2013 in pilot area, and total of 681 people were interviewed face to face. By using the contingent valuation method, we elicited people’s WTI and WTP for insurance, and the results were 88 % and 160 Yuan. We also analyzed their influencing factors using Probit and Tobit model. Regression results showed that risk perception was the leading factor associated with insurance demand, followed by risk exposure, sociodemographic elements and personal characteristics. Only one aspect of disaster experience—escape experience—had positive effect on WTI. People living in the reinforced house showed lower WTP, which verifies the adverse selection did exist. The findings pointed that rich ones and village cadres were more willing to pay for insurance, and the government propaganda for earthquake mitigation could increase ones’ WTP. In addition, some personal characteristics could also affect the WTI and WTP. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Ling Tian & Peng Yao, 2015. "Preferences for earthquake insurance in rural China: factors influencing individuals’ willingness to pay," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 93-110, October.
    • Handle: RePEc:spr:nathaz:v:79:y:2015:i:1:p:93-110
    DOI: 10.1007/s11069-015-1829-0
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    Cited by:

    1. Aoqing Li & Zaiwu Gong & Jeffrey Yi-Lin Forrest, 2023. "Financial fund allocation in China's catastrophe insurance market: a game-theoretic analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 117(3), pages 3181-3202, July.
    2. Feng Kong & Shao Sun, 2021. "Understanding and Strengthening the Emergency Management and Comprehensive Disaster Reduction in China’s Rural Areas: Lessons from Coping with the COVID-19 Epidemic," Sustainability, MDPI, vol. 13(7), pages 1-13, March.
    3. Harsh K. Mistry & Domenico Lombardi, 2023. "A stochastic exposure model for seismic risk assessment and pricing of catastrophe bonds," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 117(1), pages 803-829, May.
    4. Nicolò Barbieri & Massimiliano Mazzanti & Anna Montini & Andrea Rampa, 2022. "Risk Attitudes to Catastrophic Events: VSL and WTP for Insurance Against Earthquakes," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 317-337, July.
    5. Ling-Yun He & Hong-Zhen Zhang, 2021. "Spillover or crowding out? The effects of environmental regulation on residents’ willingness to pay for environmental protection," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 105(1), pages 611-630, January.
    6. Ziqiang Han & Xiaoli Lu & Elisa I. Hörhager & Jubo Yan, 2017. "The effects of trust in government on earthquake survivors’ risk perception and preparedness in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 86(1), pages 437-452, March.
    7. Bih-Chuan Lin & Chun-Hung Lee, 2023. "Conducting an adaptive evaluation framework of importance and performance for community-based earthquake disaster management," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 115(2), pages 1255-1274, January.
    8. Chun-Min Zhang, 2020. "Seismic risk-coping behavior in rural ethnic minority communities in Dali, China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 103(3), pages 3499-3522, September.

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