Can Trust Motivate Farmers to Purchase Natural Disaster Insurance? Evidence from Earthquake-Stricken Areas of Sichuan, China

Abstract

Natural disasters cause great losses of property and life in many areas of China. However, rural residents do not always insure themselves against these losses. Measuring the correlation between trust and farmers’ behavior related to the purchasing of natural disaster insurance is of great significance to the implementation of natural disaster insurance pilot programs and insurance systems in China. This article analyzes data from a survey of 327 households in four districts and counties of Sichuan Province, China, that were affected by the Wenchuan and Lushan earthquakes. According to the relevant theories of trust, trust was divided into three dimensions: authority trust, collective trust, and relationship trust. Then a technology acceptance model was built, and PLS-SEM was used to comprehensively analyze the correlation between different dimensions of trust and farmers’ insurance purchase behavior. The results show that (1) only relationship trust was directly and significantly positively correlated with insurance purchasing behavior. Although there was no direct significant correlation between authoritative trust or collective trust and buying behavior, relationship trust was found to indirectly affect buying behavior. (2) Younger farmers and those with higher incomes are more likely to buy disaster insurance if they live in a disaster-threat zone, have experienced disasters, and are risk averse. We then discuss the correlations between farmers’ trust and natural disaster insurance purchasing in areas threatened by earthquake disasters. This provides a policy inspiration for the promotion of disaster insurance and the construction of insurance systems in China.

Keywords

• trust
• natural disaster insurance
• PLS-SEM
• technology acceptance model
• correlation judgment