Trust and commercial insurance participation: An incomplete contract perspective

From the perspective of the incompleteness of commercial insurance contracts, this study conducts a micro-level analysis of the impact of residents’ trust on their behavior in commercial insurance participation. The findings indicate that trust and trust structure have a significant positive impact on residents’ demand of commercial insurance protection and the willingness of insurance participation. Specifically, interpersonal trust primarily influences the willingness of insurance participation, while institutional trust plays a crucial role throughout the insurance decision-making process. Factors commonly associated with household insurance participation, such as disposable income levels, show the complement relationship with trust. Additionally, factors affecting residents’ rational decision-making, such as the purpose of insurance purchase and the sources of income, also influence the extent to which trust impacts the insurance participation decisions of residents. This study confirms the significant role of residents' trust in decision-making on commercial insurance participation, and the importance of both promoting the residents' trust level and transformation of trust structures in bridging the gap between the scale of Chinese insurance market and the income levels of local residents. This research provides new insights for improving the health security level of residents and perfecting the financial structure in the context of economic transformation.