Document Type : English paper for special issue on "climate change & insurance industry"

Authors

• Mohammad Amin Zandi ¹
• Mostafa Mansouri ²
• Mohammad Ehsan Zandi ³

¹ Assistant Professor, Department of Economic Planning and Development, Faculty of Economics, Allameh University

² Master& student in E-commerce Economics, Allameh Tabatabaei University, Tehran, Iran

³ PhD in science and technology policy, University of Tehran, Tehran, Iran

Abstract

The accelerating global environmental crisis has intensified the necessity of fostering sustainable behavioral patterns within the financial services sector, catalyzing the emergence of *green insurance* as a novel and strategic instrument in the developing world. This study situates itself within that paradigm, aiming to elucidate the cognitive and psychological determinants influencing the willingness of Iranian consumers to purchase green insurance products. In a context characterized by severe ecological challenges—ranging from air pollution to water scarcity and biodiversity deterioration—understanding the interplay of individual awareness, concern, attitudes, and institutional trust becomes imperative for advancing sustainable financial systems. Green insurance is both a mechanism of environmental stewardship and a tool of risk management, holding promise for reconciling ecological responsibility with economic prudence. Yet, despite global progress in sustainability discourse, adoption rates remain low in emerging markets where both environmental literacy and trust in institutions continue to evolve.

The research was grounded in three theoretical pillars—the *Theory of Planned Behavior (TPB)*, the *Knowledge-Attitude-Behavior (KAB)* model, and the *Environmental Values Framework (EVF)*—which together allow comprehensive examination of the linear and indirect paths among cognitive, affective, and intentional constructs. The study implemented a quantitative cross-sectional survey involving 397 systematically sampled participants representing diverse demographic backgrounds. Methodologically, each construct was operationalized through validated scales: *environmental awareness* through responses reflecting knowledge of environmental problems and their consequences; *environmental concern* through three subdimensions—egoistic, social-altruistic, and biospheric concern—capturing the multi-layered nature of ecological worry; and *environmental attitude* via the New Ecological Paradigm (NEP) scale, assessing broad beliefs regarding humanity’s relationship with nature. *Trust in insurance companies* was examined through perceived reliability, credibility, and integrity, forming the institutional dimension of the analysis. The dependent variable, willingness to purchase green insurance, was assessed via behavioral intention statements, while socioeconomic and experiential covariates—income, education, age, gender, and previous insurance engagement—were employed as controls.

Data analysis was performed using *Partial Least Squares Structural Equation Modeling (PLS-SEM)*, a variance-based technique suitable for evaluating complex interdependent relationships and simultaneously assessing both measurement and structural components. The model demonstrated sound psychometric properties and strong fit indices, validating its theoretical robustness. Empirical results confirmed all principal hypotheses at high statistical significance. *Environmental awareness* positively affected purchase willingness, signifying the critical role of ecological knowledge in motivating sustainable insurance behavior. *Environmental concern*, conceptualized as a second-order construct integrating egoistic, altruistic, and biospheric elements, exerted similarly powerful effects; individuals emotionally invested in environmental issues displayed higher readiness to engage with green financial innovations. *Environmental attitude*, as measured through NEP, further strengthened this link, indicating that pro-ecological worldviews substantively shape consumer inclination toward sustainable insurance products.

Among the predictors, *trust in insurance institutions* emerged as the most decisive factor. This dimension revealed that perceived credibility and honesty of providers substantially condition consumer intentions, underscoring the essential role of institutional reputation as a catalyst for adoption. Complementary effects were found across control variables: *income* correlated positively with purchase intentions—indicating the relevance of economic feasibility—while *education* amplified acceptance of sustainability-oriented arguments, and *prior insurance experience* increased familiarity and confidence, thereby facilitating openness to green variants. Together, these patterns substantiated the integrated behavioral framework by revealing that purchasing intention results from multilayered cognitive and emotional processes rather than isolated rational evaluation.

The research conveys profound implications for both theory and practice. Conceptually, it validates that awareness, though essential, remains insufficient without corresponding emotional and attitudinal engagement. The combination of *environmental concern* and *ecological attitude* transforms awareness into behavioral readiness. Practically, the decisive influence of *institutional trust* reveals the foundational challenge facing Iranian insurers: credibility must be cultivated before green insurance can penetrate mainstream markets. The findings imply strategic recommendations: insurers should design *educational and awareness campaigns* that integrate emotional appeals connecting environmental degradation with personal and social well-being; they must innovate product designs tailored to domestic socioeconomic structures, ensuring accessibility and relevance. Transparent communication and corporate social responsibility initiatives are indispensable in rebuilding confidence among customers who are traditionally skeptical of insurance providers. Equally, partnerships with governmental and environmental organizations could enhance perceived legitimacy and reinforce collective trust.

In sum, this study contributes valuable empirical evidence to the burgeoning scholarship on *green finance* and sustainability behavior in developing economies. It advances an integrative model combining cognitive, affective, and institutional dimensions and empirically validates its explanatory power in the Iranian context—a domain hitherto underexplored. The findings indicate that the shift toward sustainable financial systems demands not merely informational elevation but structural reformation in trust and engagement mechanisms. Future research should deepen this exploration by examining the moderating influences of demographic and psychographic variables, validating behavioral outcomes beyond declared intentions through longitudinal or experimental designs, and incorporating social norms and peer-effect dynamics to capture collective behavioral diffusion. Such endeavors would enrich understanding of how environmentally oriented financial innovations evolve under variegated cultural and institutional conditions, progressively shaping the trajectory of sustainable insurance markets across developing societies.

Keywords

• Environmental Insurance
• Environmental Knowledge
• Insurance Industry
• Multidimensional Biospheric Concern
• Sustainable Consumer Behavior

Main Subjects

• Insurance Social Studies