On household insurance demand and loss control: Evidence from the great east Japan earthquake

After Japan's largest ever-recorded earthquake on March 11, 2011, a most devastating tsunami hit Japan. Almost 20,000 people died from the combined earthquake, tsunami, and nuclear crisis. As of January 2013, almost 300,000 people made homeless by the disaster continue to live in emergency housing. In this paper, we report the results of a survey of 1,278 Japanese households and analyze insurance demand and loss control following the Great East Japan Earthquake. We find that several respondents newly purchased earthquake insurance and undertook a number of loss-control activities in light of the Great East Japan Earthquake. We also find that people consistently prefer loss-control activities to earthquake insurance as risk management tools. However, while the purchase of earthquake insurance and the engagement in some types of earthquake-related loss control, such as the seismic strengthening of houses, are associated with higher income.