New Consumers’ Perspective in Insuring Earthquakes

Abstract

Ever since the “Wenchuan earthquake” in May 12, 2008, there are some other earthquakes every year in China. China seems at the stage with active earthquakes. However, there is nothing the government can do to prevent such natural disasters. Instead the government can only try to issue alert information and to build an efficient afterward recovering system. Earthquake insurance could be an effective way to provide additional recovering money besides government funds. But the question is whether consumers are willing to buy and pay for earthquake insurance if government is not paying. Therefore, this chapter is to investigate Chinese residents’ preferences for earthquake insurance, especially to analyze their willingness to accept and willingness to pay for earthquake insurance. Previous studies have shown that risk perception, social trust, and consumers’ characteristics have significant impact on consumers’ earthquake insurance. Thus the measure of association was used to analyze Chinese consumers’ preferences, followed by a short case for “Pearl River Delta” region in China. The data was collected though an online survey in Shenzhen, a core city in “Pearl River Delta” region. A total of 637 surveys were returned, and of those collected, 428 are valid. The results indicate that consumers are willing to buy and pay for earthquake insurance for higher-risk regions. However, for the lower-risk regions, government has to put more effort on increasing social trust for consumers. In addition, insurance companies need to provide earthquake property insurance product and earthquake life insurance product separately and together too according to consumers’ different preferences.