Effects of social relations on family’s participation in commercial insurance—based on the perspective of strong and weak relations

Social relations, as a form of informal insurance system, exert both a promotional and a substitution effect on household participation in commercial insurance market. This study, rooted in social relation theory, categorizes social relations into strong and weak relations. Through establishing a social network model, we demonstrate the opposing effects of strong and weak relations on commercial insurance participation. By utilizing the data from the CHFS in 2015, we identify these contrasting influences and their mechanisms. It has been found that social relations can significantly enhance the likelihood and extent of household’s participation in commercial insurance. Strong relations exert a substitution effect on household commercial insurance participation, while weak relations have a promotional effect. Strong relations enable household risk sharing through the mechanism of social reciprocity, consequently significantly reducing the household’s demand for commercial insurance. Meanwhile, weak relations significantly increase household commercial insurance participation through information dissemination and peer effect mechanisms. This research provides a fresh perspective on how emerging economies and developing countriese can properly handle the relationship between traditional culture and modern market systems, thereby promoting the development of the commercial insurance market.