Air pollution significantly increases the likelihood of the Chinese population purchasing commercial insurance according to a new study published in an August 2025 issue of the science and research website www.sciencedirect.com.
The study Air pollution and household commercial insurance purchasing behaviour authored by Jie Lei and Tongyu Wang of Zhongnan University of Economics and Law, Wuhan China reveals that air pollution influences insurance demand through two channels: heightening household perception of potential risks associated with air pollution and increasing household expenditures on smog protection and medical care.
The data analysed for the study found that the effect is more pronounced among households with high financial literacy, those at the parenting and retirement stages of the family life cycle, those with high social trust, and those residing in areas with limited access to medical resources.
Also, households tend to prefer life insurance products that provide substantial coverage without requiring principal repayment in response to air pollution.
The study said, “In response to the growing severity of air pollution, China officially classified smog as a natural disaster harmful to public health in 2014 and has since implemented a series of stringent policies to combat air pollution.”
Several studies have already elaborated on the dangers of air pollution. Studies have demonstrated that air pollution significantly erodes residents' physical health and safety and increases household medical expenses. Air pollution can also trigger anxiety and depression and reduce life satisfaction.
These physiological and psychological harms jointly constitute the multidimensional impact of air pollution on individual and household well-being. Air pollution not only undermines residents' quality of life but also negatively influences social stability and sustainable economic development. In this context, insurance can serve as a tool for economic compensation and risk management, effectively reducing the economic losses experienced by individuals and households when facing adverse shocks.
Residents who purchase commercial insurance can obtain protection against air pollution-induced health issues and financial risks, thereby improving their capacity to manage risks and increasing their sense of security. Therefore, investigating the influence of commercial insurance in managing air pollution risks and assessing its effectiveness is crucial for improving risk management systems and reducing air ‘pollution's negative economic and social impacts.