Circumstances of morals or habits that increase the probability of a loss from an insured peril. Example: An insured previously convicted of arson.

The possibility that a person may act dishonestly in an insurance transaction.

Refers to the likelihood of a person or organisation willing to take on more risk as they are covered by insurance.... more on: Moral Hazard

The increase in the chance of loss caused by the disregard of traditionally "moral" behavior, e.g., misrepresentation, concealment, arson.

A condition of morals or habits that could affect that person as a standard insurable risk.

a condition in which the information between two partners linked in a trading relationship is asymmetrical; thus one partner may deceive the other. For example, it is difficult for the average consumer to differentiate between the quality, safety or efficacy of a veterinary remedy. When quality controls are weak, public action is justified to protect buyers by enforcing quality standards. The state has responsibility in cases of moral hazard.

The tendency of individuals, firms, and governments, once insured against some contingency, to behave so as to make that contingency more likely. A pervasive problem in the insurance industry, it also arises internationally when international financial institutions assist countries in financial trouble.

The insurance underwriter needs to assess not only the physical hazard involved in any risk, such as the construction of a building and what it is to be used for, but also the 'moral hazard'. Moral hazard refers to the character and circumstances of the would-be insured person, or of his employees. It covers such" elements as honesty and carelessness, as well as any previous difficulties with this client over claims settlements.

the tendency for people who purchase or are provided with insurance to be less cautious because they have less reason to avoid what they are insured against.

the chance that people will alter their behavior in unanticipated ways after an agreement or contract has been defined

the loss to an insurance company resulting from possible lack of prudence or honesty on the part of policyholders

a subjective characteristic of the insured that increases the chance of loss

Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured peson. Moral hazard is the risk factors that affects the decesion of the insurance company to accept the risk.

Phenomenon by which a person's or firm's behavior may change after buying insurance so as to increase the probability of theft, fire, or other loss covered by the insurance.

The hazard present in an insuring situation if the insured purposely creates a loss to later collect from the insurance company.

The impact that insurance, whether it is implicit or explicit (including lender-of-last-resort activity), may have in increasing the risks (or hazard) that investors may undertake in lending strategies. Back to the top

The idea that insured persons are more likely to engage in risky behavior or use covered services because they are insured and therefore insulated from bearing the full cost of their actions.

A condition or characteristic by which an insured intends to profit from an insured loss.

The possibility that the signal or expectation of possible future government support may induce an undesirable change in behavior by management of an enterprise or bank, for example by engaging in more risky activities because some of the potential losses are seen as being effectively underwritten by the government.

The danger faced by the insurer in some cases due to certain hidden factors when there is no genuine need for insurance for a proposer or the object of taking out the insurance would be speculative in a proportion of cases.

Hazard created by an individual who would be willing to create a loss situation on purpose just to collect from the insurance company.

The incentive for additional risk taking that is often present in insurance contracts and arises from the fact that parties to the contract are protected against loss.

Underwriting the risk affecting an application based on factors such as the personal reputation and character of the applicant, business ethics or the existence of a criminal record. It concerns the intention or motivation behind the buying of a life insurance policy.

Dishonest predisposition of the insured that increases the chance of loss. Examples include arranging an accident to collect the insurance and inflating the amount of a claim.

Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss, for instance, bad habits, low integrity, poor financial standing.

A hazard that increases the probability of loss from a peril due to an individual's indifference or malicious intent.

A hazard resulting from the indifferent or dishonest attitude of an individual in relation to insured property.

A condition of morals or habits that increase the probability of a loss from a peril.

principle that says that those who purchase insurance have a reduced incentive to avoid what they are insured against

The danger that a proposed insured might deliberately attempt to conceal or misrepresent information. Moral hazard is a risk factor that affects the underwriting decision.

A hazard involving the questionable character or integrity of an insured, which could lead to dubious or intentionally caused claims.

A moral characteristic of an insured that may increase the likelihood of a loss, e.g. integrity, honesty, experience.

a term based on the principle that if actors are allowed to escape the consequences of their risky actions, they are more likely to engage in reckless behavior in future. The moral hazard argument is often used to argue against the forgiveness of legally contracted debt; it has also been used to criticize IMF rescue packages, which bail out reckless bankers and private investors.

Risks caused by the behavior of a policyholder, like intentionally setting a fire to collect insurance.

The effect of personal reputation, character, associates, personal living habits, financial responsibility, and environment upon an individual's general insurability.

The potential for the attitudes, lifestyle and conduct of individuals to affect the level of risk attaching to a proposal for life assurance.

Moral Hazard refers to increase in probability of loss that results from dishonesty in the character of the insured person. Thus it is the dishonest tendencies on the part of the insured person that may induce that person to attempt to defraud the insurance company

12 An insurance problem; when the cost of a disaster is reduced with insurance, people have less incentive to avoid the disaster.

Hazard arising from any non-physical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance bad habits or low integrity. An example might include failing to properly care for an insured goat because it is insured, thereby increasing the chance it will die of disease.

The risk that a party to a transaction has not entered into a contract in good faith, has provided misleading information about its assets, liabilities, or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.

A situation where insurance is being taken with the ulterior motive of staking a (false) claim. This could be where the loss has already taken place, or where there is a pre-existing condition that is left undisclosed, or a situation where the insured is facing heavy losses from other activities and is seeking to buy insurance with a view to collecting a claim and offsetting his losses.

The chance that a contract will change the risk-taking behavior of one or both of the involved parties.

Danger of loss arising from the nature of the insured rather than from the physical nature of the risk. This would encompass those instances where the chance of loss is increased by an insured's carelessness, incompetence, recklessness, indifference to loss or an insured's fraudulent nature.

The risk that the existence of a contract will change the behavior of one or both parties to the contract, e.g. an insured firm will take fewer fire precautions.

Determining whether or not an insurance applicant's financial situation and moral behavior represent a hazard that could affect that person as a standard insurable risk, as revealed by considering the applicant's habits, environment, mode of living, and general reputation. This information is usually obtained during a personal history interview conducted by telephone with the home office underwriting department, or by an inspection report conducted by a consumer investigative agency.

A condition of morals or habits that increases the probability of loss from a peril. An extreme example would be an individual who previously burned his own property to collect the insurance.

the possibility of loss being caused or aggravated by the dishonesty of the insured, his agents, or employees. It arises from the character and circumstances of the insured, rather than the nature of the property covered or its location, which is known as the PHYSICAL HAZARD. (See MORALE HAZARD)

In economic theory, the term moral hazard refers to the possibility that the redistribution of risk (such as insurance which transfers risk from the insured to the insurer) changes people's behaviour.