Factors affecting crop insurance purchases in China: the Inner Mongolia region

Abstract

PurposeThe purpose of this paper is to explain the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.Design/methodology/approachA survey of farmers in Inner Mongolia, China, is undertaken. Selected variables are used to explain crop insurance purchases, and a probit regression model is used for the analysis.FindingsResults show that a number of variables explain crop insurance purchases by farmers in Inner Mongolia. Of the eight variables in the model, seven are statistically significant. The eight variables used to explain crop insurance purchases are: knowledge of crop insurance, previous purchases of crop insurance, trust of the crop insurance company, amount of risk taken on by the farmer, importance of low crop insurance premium, government as the main information source for crop insurance, role of head of village, and number of family members working in the city.Research limitations/implicationsA possible limitation of the study is that data includes only one geographic area, Inner Mongolia, China, and so results may not always fully generalize to all regions of China, for all situations.Practical implicationsCrop insurance has been recently expanded in China, and the information from this study should be useful for insurance companies and government policy makers that are attempting to increase the adoption rate of crop insurance in China.Social implicationsCrop insurance may be a useful approach for stabilizing the agricultural sector, and for increasing agricultural production and food security in China.Originality/valueThis is the first study to quantitatively model the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.