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A new rating system of automobile insurance for vehicle damage in Taiwan was launched in 1996, introducing a deductible that increases with the number of claims. In this article, we provide a theoretical rationale for the existence of an increasing per-claim deductible system and show that the new system is most likely an optimal choice for those insured who tend to have lower claims probability when incentives are present. Using a unique dynamic data set, we are able to conduct a natural experiment to examine the incentive effects (both positive and negative) by looking at the change in claim tendency before and after switching between two deductible plans: an increasing per-claim deductible and a zero deductible. Our results provide direct evidence of the effects of deductible structures on claim behavior. Copyright The Journal of Risk and Insurance, 2007.

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Purpose The purpose of this paper is to examine the relationship between the purchase of insurance and economic growth among agricultural households. Design/methodology/approach Using survey data of the agricultural sector obtained from China over two years, the authors highlight the effect of job switching between farm and non-farm activities on the demand for insurance by applying the difference-in-differences and triple differences methodologies. Findings The results show that compared with farm income, non-farm income is associated with an increased (decreased) demand for insurance among households in Eastern (Western) China. The inequality in degree of economic development between the regions plays an important role in this finding. Both education and income exhibit a positive relationship with insurance demand for most regions. In addition, in 2007, regardless of farm or non-farm sector, switches are (except in the northeast region) associated with a significant increase in insurance expenditures. Households who switched from the farm to non-farm sector in 2007 are significantly negatively associated with insurance expenditures in the western region. Social implications Inequalities in the degree of economic development play an important role in insurance consumption. Originality/value The authors assess the determinants of insurance market development in the agricultural sector in China, characterized by inter-regional disparities in economic development.

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