Insuring for cyclone events: What matters to small business owners?

Using a discrete choice experiment, we examined the impact of previous disaster experiences, charity hazard, and temporal orientation on willingness to pay (WTP) for hypothetical cyclone insurance. We found that business owners preferred policies that covered flood, windstorm, and business interruption regardless of the combination. They also preferred shorter waiting periods and higher coverage levels. Respondents who had previously experienced cyclones were more willing to pay for the presented insurance policies than those who had not. Furthermore, future-orientated owners were more likely to pay for the presented policies, while charity hazard was positively correlated with WTP for government-provided insurance.