Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China

Fu, Hong; Zhang, Yuehua; An, Yinuo; Zhou, Li; Peng, Yanling; Kong, Rong; Turvey, Calum G.

doi:10.1057/s10713-021-00071-6

Cited by 7 publications

(15 citation statements)

References 38 publications

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“…Odds ratio reveals that a one-level increase in the premium charge attribute ranges from 3.074 to 5.14 times more likely to offer insurance. While we hypothesized that the premium effect would be positive (in comparison to negative effects in demand models such as Fu et al. , 2022), the results suggest that agents are conscious of the general elasticity of demand and that excess loading, or higher premium to coverage ratios will reduce demand as suggested by Woodard and Yi (2020).…”

Section: Data and Resultsmentioning

confidence: 88%

“…Results from Cai et al. (2021) and Fu et al. (2022) in WTP find that coverage is a strong driver of insurance demand, more so than the premium itself, and it appears that insurers understand this.…”

Section: Data and Resultsmentioning

confidence: 99%

“…Follow on research in Turvey et al. (2019), Fu et al. (2022) and Cai and Song (2017) explored channels of insurance demand related to how Chinese farmers perceived risk.…”

Section: Insurance Studies Related To Demand and Supplymentioning

confidence: 99%

“…While the demand for agricultural insurance has been extensively researched (for example, Cai et al. , 2020, 2021; Fu et al. , 2022; Kong et al.…”

Section: Introductionmentioning

confidence: 99%

“…, 2022). For example, Fu et al. (2022) based their study on five demand attributes including claim starting point (coverage), insurance premium, indemnity (level of compensation), insurance provider (public or private) and insurance loan option (insurance bundled credit).…”

Section: Introductionmentioning

confidence: 99%

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The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

Yang

Wen-jun

Turvey

2022

AFR

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Purpose This paper investigates Chinese agricultural insurance agents willingness to offer (WTO) livestock insurance based on the variations of eight main attributes of livestock insurance.Design/methodology/approach This study implements discrete choice experiments (DCE) with actual insurance agents who design, sell and operate livestock insurance in China. The choice experiment of this study is based on the D-optimal approach, a six-block design, with 15 cards per block and two choices per card. The sample size was 211. Econometrics results are based on conditional and mixed logit models.Findings The authors find that the subsidy effect is enormous; a one level increase of subsidy leads to 3.166 times higher probability to offer. This subsidy effect is important as it confirms the endogenous structure between price and quantity in insurance offering, where subsidy does not only incentivize demand but also the supply. Another main factor of insurance investigated is the impact of different coverage types on agents' WTO. The authors find that agents prefer mortality insurance the most, followed by revenue insurance and profit insurance, while Index-Based Livestock Insurance (IBLI) is the least preferred to offer. Agents' knowledge about these newer types of insurance supports their WTO as well; thus, proper education is necessary to promote the more advanced types of livestock insurance.Research limitations/implications A limitation is that in the presence of COVID 19, and administrative issues at the local level, the sample was not randomly drawn. Nonetheless, the authors believe that there is enough diversity across participants, insurers and provinces and have done sufficient robustness checks to support results and conclusions.Practical implications This study provides further validation for the DCE research method that could potentially be applied to different analyses: using choice experiments to study insurers and reveal their preferences, through combinations of various levels of core attributes for insurance products. The findings and contribution are critical to the reform and improvement of livestock insurance in China and for insurance markets more broadly. The authors find that insurers do not place equal weights or values on insurance product attributes and do not view types of insurance equally. In other words, while farmers may hold different preferences about the type of insurance they demand, the results suggest that insurers also hold preferences in the type of insurance they sell.Originality/value So far as the authors are aware, this is the first DCE designed around the supply of insurance products with the subjects being insurance agents, marketers and executives.

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Section: Data and Resultsmentioning

confidence: 88%

Section: Data and Resultsmentioning

confidence: 99%

“…Follow on research in Turvey et al. (2019), Fu et al. (2022) and Cai and Song (2017) explored channels of insurance demand related to how Chinese farmers perceived risk.…”

Section: Insurance Studies Related To Demand and Supplymentioning

confidence: 99%

“…While the demand for agricultural insurance has been extensively researched (for example, Cai et al. , 2020, 2021; Fu et al. , 2022; Kong et al.…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

Yang

Wen-jun

Turvey

2022

AFR

Self Cite

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Assessing the demand for hydrological drought insurance in irrigated agriculture

Gómez‐Limón

Granado-Díaz

2023

Agricultural Water Management

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Identifying farmers' preferences for types of credit and its market structure in rural Benin using the conjoint analysis approach

Sonehekpon

Fiamohe²

2022

AFR

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PurposeThis study analyzes farmers' preferences for agricultural credit and its market structure in rural Benin using the conjoint analysis approach.Design/methodology/approachThe data used come from primary sources collected from 228 randomly selected farmers. The conjoint analysis approach was used to produce the results. The bias associated with the heteroscedasticity of the error terms was fixed using the weighted least squares estimation method. Agricultural credit markets were segmented using the Calinski algorithm.FindingsThe study results reveal that farmers prefer a long-term agricultural credit with a low interest rate received via mobile banking. The interaction between a type of credit with collateral and a low interest rate is positively correlated with farmers' credit demand. The authors also found that agricultural credit markets are heterogeneous because of the heterogeneity in farmers' credit demand. This result has led to three different rural credit market segments identified in the selected study's sites. The market share simulation reveals a significant market share for the type of credit preferred by farmers in two segments.Research limitations/implicationsThe proven evidence from this study can guide the development of appropriate agricultural financial products that promote financial inclusion among farmers in rural Benin. More specifically, agricultural financial policies that promote digital long-term credit with low interest rate and appropriate guarantee mechanisms can promote financial inclusion among farmers and reduce the problem of asymmetric information in agricultural credit market. The study also calls for the promotion of differentiated policies across the three identified segments in order to positively impact the welfare of all farmers.Practical implicationsThe use of agricultural financial products that include digital long-term credit with low interest rate and appropriate guarantee mechanisms promote financial inclusion and reduce asymmetric information problems in agricultural credit markets in rural Benin.Social implicationsThe promotion of long-term digital and cheap credit improves farmers household's wellbeing in rural Benin.Originality/valueThis study contributes to a better understanding of the structure of rural credit markets. It also reveals the most preferred characteristics of rural credit profiles by farmers. Besides, it validates the importance of the use of guarantee as an appropriate mechanism which minimizes the problem of asymmetric information between financial agents and farmers.

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Subjective and objective risk perceptions and the willingness to pay for agricultural insurance: evidence from an in-the-field choice experiment in rural China

Cited by 7 publications

References 38 publications

The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

The willingness to offer livestock insurance in rural China: a discrete choice experiment among Chinese insurance agents

Assessing the demand for hydrological drought insurance in irrigated agriculture

Identifying farmers' preferences for types of credit and its market structure in rural Benin using the conjoint analysis approach

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