Minority community willingness to pay for earthquake insurance

Abstract

Purpose The purpose of this paper is to investigate the relationship between potential affecting factors and the local communities’ willingness to pay (WTP) for housing earthquake insurance (HEI) in the context of ethnic minority communities. Design/methodology/approach A literature review was done to identify possible factors affecting WTP for HEI. Fieldwork was conducted in 2017 in Dali Minority Autonomous Prefecture, where the first Chinese HEI was launched in 2015. Interviews were done in two earthquake-prone counties, as the main ethnic minority communities in the area. A total of 536 questionnaires were collected and used as empirical data for testing the impacts mechanism. Findings Respondents’ risk perception, risk exposure, self-prevention behaviors, government aid, insurance experience and sociodemographic characteristics were hypothesized as theoretical indicators correlated to WTP for HEI. Empirical analysis results predict that WTP for HEI is significantly influenced by risk perception, insurance experience, government aid, and age and out-migrating labors. It is evident that higher risk perception and more insurance experience lead to stronger desire for HEI coverage. However, dependency on government aid negatively affects WTP for HEI. Moreover, WTP for HEI is negative in relation to age and out-migrating labors. Surprisingly, ethnic-culture factors were not statistically significant to WTP for HEI. Originality/value This paper is an attempt to identify and verify factors affecting WTP for HEI, bridging the gap of inadequate research on WTP for HEI in ethnic minority communities.