Factors Affecting Demand for Earthquake Insurance

Demand for earthquake insurance is directly or indirectly related to several independent variables. In this study, a sample of 800 owner-occupants of residential units in Tehran was categorized by characteristics of the head of household (age, education, employment, monthly income, attitude toward insurance company, trust in federal disaster relief, geophysical risk) and the structure (type, age, construction quality, value). The effect of these characteristics on the demand for insurance was assessed. The results showed that the level of seismic risk significantly affected the demand for earthquake insurance and that an increase in the premium and value of the structure decreased the demand for earthquake insurance. In addition, the perception of risk significantly increased the demand for residential earthquake insurance. Finally, confidence in federal disaster relief decreased the demand for earthquake insurance. Income level had no significant effect on the demand for insurance.