On the Impact of Agricultural Livestock Microinsurance on Death-Loss, Production and Vaccine Use: Observations from a Quasi-Natural Experiment in China

Yuehua Zhang, Xi Zhu () and Calum Turvey
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Yuehua Zhang: Public Administration College, Zhejiang University, Zhejiang 310027, China
Xi Zhu: Antai College of Economics & Management, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai 200030, China.

The Geneva Papers on Risk and Insurance - Issues and Practice, 2016, vol. 41, issue 2, 225-243

Abstract: Moral hazard remains a major concern in microinsurance markets in most developing countries. However, it is hard to find good measures and control individual heterogeneity to make reliable tests. We address these problems by taking advantage of a natural experiment due to an insurance company’s policy change in Deqing County China in 2009 and 2010. We investigate the effect of pig insurance on death loss, production and vaccine use based on a detailed household survey. Difference-in-differences and propensity score-matching estimators show that insurance’s effect on mortality and vaccine use is not significant for both hogs and sows. Thus, there is no evidence of moral hazard. However, the insurance does have a positive impact on hog production, but not for sows. These results show that moral hazard problems should not be the main barrier to developing the livestock microinsurance market.

Date: 2016
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