Studies from University of Alabama Have Provided New Information about Environmental Compliance (Pollution Liability Insurance and Corporate Environmental Compliance In China): Environment – Environmental Compliance

2025 DEC 22 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on Environment - Environmental Compliance is the subject of a report. According to news reporting from Tuscaloosa, Alabama, by NewsRx journalists, research stated, “This study examines the effect of a pollution liability insurance mandate on corporate environmental compliance in Shenzhen, China. We employ a triple differences design, comparing electroplating and circuit board (ECB) manufacturing firms, mandated to purchase insurance, to industries and a neighboring city without the mandate.”

Financial support for this research came from Corporate Environmental Compliance: A Case Study of Shenzhen.

The news correspondents obtained a quote from the research from the University of Alabama, “Results show a 0.48 reduction in annual environmental violations per firm (a 72% decrease) across all Shenzhen ECB firms. Within the Shenzhen ECB industry, only about half of firms comply. Notably, both insured and uninsured firms reduced violations, consistent with anticipation that (eventual) premiums would depend on past violations. The insurance could generate two opposing forces: premium-based incentives to reduce violations versus moral hazard among the insured. We find suggestive evidence that insured firms’ environmental compliance gains are partially offset by moral hazard.”

According to the news reporters, the research concluded: “Our findings demonstrate that premium-based incentives dominate and effectively counteract market failures due to asymmetric information, increasing environmental compliance on net.”

This research has been peer-reviewed.

For more information on this research see: Pollution Liability Insurance and Corporate Environmental Compliance In China. Journal of Risk and Insurance, 2025. Journal of Risk and Insurance can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA. (Wiley-Blackwell - http://www.wiley.com/; Journal of Risk and Insurance - http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6975)

Our news journalists report that additional information may be obtained by contacting Alecia Cassidy, University of Alabama, Dept Econ Finance & Legal Studies, Tuscaloosa, AL, United States. Additional authors for this research include Fan Wu and Yiyuan Zhang.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1111/jori.70029. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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