Exploring the Effect of Policies on Environmental Pollution Liability Insurance in China’s Highly Polluting Industries: Applying Ajzen’s Theory of Planned Behavior

ABSTRACTThis paper investigates the effects of different types of government policies related to environmental pollution liability insurance (EPLI) and how these policies promote the demand for EPLI of polluting enterprises. Based on the theory of planned behavior (TPB), we establish a research framework to analyze the effects and mechanisms of the three different policies (mandatory, incentive, and monitoring policies). Our empirical results suggest that the mandatory and monitoring policies can effectively promote companies to buy insurance, but the incentive policies have no significant impact on the insurance demand overall. Furthermore, companies with more positive environmental attitudes are not sensitive to mandatory policies. Although the overall effect of incentive policies is not significant, they have a significant positive impact on the EPLI demand of non-state-owned companies. The monitoring policies prompt enterprises to purchase insurance by strengthening information disclosure and compliant production.KEYWORDS: Environmental pollution liability insuranceheterogeneous policiestheory of planned behaviorJEL: D22Q58O53 Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1. Data source: "2012 China Environmental Yearbook."2. According to the data of the China Banking and Insurance Regulatory Commission (CBIRC), in 2016, there were 14,400 insured companies nationwide with the premium of 284 million yuan and the insured amount of 26.4 billion yuan. In 2017, the number of insured companies reached 16,000 with the premium of 315 million yuan and the insured amount of 30.6 billion yuan.3. Dieleman and Hoo (Citation1993) outlined five important categories of obstacles to the prevention of waste at manufacturing facilities, including conceptual obstacles, organizational obstacles, obstacles related to the availability of knowledge, technical obstacles and economic obstacles.4. The "Guidance (2013)" points out that the insurance companies should reasonably determine the rate for the enterprises based on the benchmark rate according to their environmental risk assessment, record of environment violations and industrial characteristics, etc.5. We select the high-polluting companies determined according to the scope of high-polluting industries as prescribed in the "Classified Administration Catalogue of Environmental Protection Inspection Industry of Listed Companies" and the industry categories as prescribed in the."Guidelines for the Industry Classification of Listed Companies." The high-polluting industries are as follows: (1) coal mining, washing and dressing industry; (2) petroleum and natural gas exploitation industry; (3) ferrous metal mining and dressing industry; (4) nonferrous metal mining and dressing industry; (5) textile industry; (6) Leathers, furs, feathers and related products and shoemaking industry; (7) paper making and paper products industry; (8) petroleum processing, coking and nuclear fuel processing industry; (9) manufacturing of chemical raw materials and chemical products; (10) pharmaceutical industry; (11) chemical fiber manufacturing; (12) nonmetallic mineral products industry; (13) ferrous metal smelting and rolling processing industry; (14) nonferrous metal smelting and rolling processing industry; (15) metal products industry; (16) power and heat production and supply industry.6. The lists of insured companies are published by the former MEP only in 2014 and 2015.7. The insured companies announced in 2014 incorporated those that carried insurance then and whose insurance contract was valid until November 15, 2014, or after. 4556 companies in 22 provinces were insured in 2014. Also, the insured companies announced in 2015 incorporated those that carried insurance then and whose insurance contract was valid until October 31, 2015, or after. 3780 companies in 17 provinces were insured in 2015.8. If the parent company is uninsured, we choose the industry its insured subsidiary belongs to and the province where the subsidiary is located when controlling the industry effect and regional effect. When a company has multiple insured subsidiaries, we choose the insured subsidiary in which the parent company has the largest shareholding so that the parent company retains more decision-making power.9. Based on Hausman specification test, the random effect model is selected for the panel analysis.10. Table A3 in the appendix reports a brief statistic description of the all variables across the subsamples affected by different policies.11. To avoid the table to be too crowd, we omitted the columns that show the regression results without control variables, which are consistent with the results when control variables are added.Additional informationFundingThe work was supported by "The Huiyuan Outstanding Young Scholars" in UIBE [21JQ07].