Internet and private insurance participation

Since the Internet is an important information intermediary, this paper examines whether and how the Internet affects private insurance participation. Using national representative household survey data from China, we show that the Internet has a significant positive effect on households' private insurance participation. Then, we use both an instrumental variable analysis and propensity score matching to identify this causal effect. Furthermore, we find that this positive effect of the Internet is mainly driven by positive information on News Portals. In contrast, information regarding insurance on BBSs is usually negative and, thus, has a deterrent effect on insurance participation. Additionally, we examine the role of trust in these impacts. The results show that netizens with a high level of trust are more likely to purchase insurance, indicating that trusting the information received online is an essential factor for participating in private insurance.