The Response of the Insurance Market to the COVID-19 Pandemic Shock in China: The Power of Confucius Culture

This article analyzes whether the Chinese insurance market is showing different responses to COVID-19 shocks depending on different domestic cultural characteristics 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). Confucius culture significantly affects life insurance’s negative response to COVID-19. In contrast, its influence on the non-life insurance market is relatively lower. This is because life insurance is more sensitive to the 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.