Factors effecting the intention to purchase flood catastrophe insurance in Chongqing municipality

Abstract

With a high natural disaster risk, China launched catastrophe insurance pilot initiatives in 15 provinces in 2013. Chongqing, a province prone to flooding, initiated its pilot program in 2017. Despite the policy, Chongqing residents predominantly depend on government assistance during disasters. Therefore, this study examines factors determining urban residents’ intention to purchase additional flood catastrophe insurance, focusing on the residents’ risk attitude, flood risk perception, and insurance awareness. Empirically, this study employs the Logit regression to analyze the survey data collected from 443 urban residents in Chongqing. For the results, risk aversion is a significant factor determining the intention to purchase additional flood catastrophe insurance for residents with high education, but not for those with lower education. Moreover, residents who have experienced frequent flooding, perceive that flood disasters as unpredictable, and know about private flood catastrophe insurance programs are more likely to have a high intention to purchase additional flood catastrophe insurance. Moreover, individuals who already have some government or private flood catastrophe insurance are more likely to purchase more. For demographics, individuals living in a large household with high income are more likely to purchase more insurance. These findings underscore the need for greater insurance coverage. Promoting awareness and education on the role of insurance against the unpredictable flood risk, as well as expanding access to private flood catastrophe insurance, are the initial steps in encouraging Chongqing residents to protect themselves from growing disaster risks.