COVID-19 Pandemic, Insurance Market Development and Culture Characteristic in China

Abstract

This paper analyzes whether Chinese insurance market’s showing different responses to COVID-19 shocks depending on different domestic culture characteristic by using monthly panel data of 31 provinces from January to August 2020 and employing the panel fixed-effects model. Overall, the results indicate that the COVID-19 pandemic is negatively associated with insurance market consumption in China. In particular, the COVID-19 outbreak leads to worse insurance market development (proxied by insurance market premium income) in those provinces with strong domestic traditional Confucius culture (measured by the number of Confucian academies). Moreover, we find that Confucius culture significantly enhances life insurance’s negative response to COVID-19 whereas relative lower influence in the non-life insurance market due to that life insurance is more sensitive to mortality risk caused by the spread of COVID-19 than non-life insurance. Overall, we provide different insights into the role of culture in insurance market development.