How Can Catastrophe Insurance Policies Reduce Direct Economic Losses from Natural Disasters under Extreme Climate Events?

Catastrophe insurance, as a financial tool for disaster prevention and mitigation, provides significant support for the risk governance of China's modernization. This paper employs the difference-in-difference method and text analysis method, based on the panel data of 31 provinces in China from 2012 to 2023, to investigate the impact of catastrophe insurance policies on the direct economic losses caused by natural disasters and the pathways through which they operate. The findings indicate that catastrophe insurance policies significantly reduce the economic losses caused by natural disasters. The results of the mechanism analysis show that the attention of local governments to climate risks has a positive moderating effect on the impact of catastrophe insurance policies on direct economic losses from natural disasters. The heterogeneous analysis reveals that the policy effects are better in the eastern region than in the central and western regions, and better in the south than in the north. Accordingly, it is suggested that regional differentiated implementation strategies be combined to further explore new models of insurance policies for disaster prevention and mitigation, in order to serve the high-quality development of China's modernization. This study enriches the empirical research on the governance effect of catastrophe insurance and provides a practical reference for improving the national disaster risk prevention and control system.