The Impact of Dialect Diversity on Household Commercial Insurance Participation

Although the size of China’s insurance market has ranked among the top in the world, the participation of family commercial insurance is still at a low level. This paper attempts to explain the low participation rate of the commercial insurance market from the perspective of dialect diversity. The study found that, first, dialect diversity reduces family commercial insurance participation by reducing the family’s sense of social trust, enhancing the informal insurance of the social network intensity within the family, weakening the knowledge spillover effect of the outer social network. Second, this paper discusses the possible measurement errors of dialect differentiation index and dialect fragments and the problem of missing geographic variables in the model, and uses river length as a instrument variable to control endogenousness. Third, this paper further validates the function of digital inclusive finance in mitigating dialect diversity to inhibit household participation in commercial insurance, and provides a possible way to address the impact of the “cultural effect” of dialect diversity. Fourth, this paper finds that the influence of dialect diversity is more pronounced in urban households, households with low financial literacy and low years of schooling. Based on the perspective of linguistic economics, this paper discusses the reasons for the low participation rate of household commercial insurance and possible solutions, which can provide a reference for the government to formulate relevant policies to promote family risk management through commercial insurance and maintain social stability.