Economy, Culture, and Insurance Consumption: Insights from the Chinese Insurance Market

Abstract

Despite fast growth in the past three decades, the Chinese insurance market is underdeveloped in terms of insurance density and penetration. In this study, we examine the cultural influence on insurance consumption in China and present evidence on the culture influence hypothesis. We find that demand-related factors explain insurance consumption while supply factors do not. Among the demand-side variables, those closely related to culture (i.e., percentage of saving in GDP and fraction of urban population) dominate economy-based variables in driving insurance consumption. Moreover, we obtain consistent evidence regarding cultural influence on insurance consumption using an international dataset across 56 countries. In general, our finding suggests that culture plays a significant role in determining insurance consumption.