MORAL HAZARD
\mˈɒɹə͡l hˈazəd], \mˈɒɹəl hˈazəd], \m_ˈɒ_ɹ_əl h_ˈa_z_ə_d]\
Definitions of MORAL HAZARD
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the loss to an insurance company resulting from possible lack of prudence or honesty on the part of policyholders
By Princeton University
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the loss to an insurance company resulting from possible lack of prudence or honesty on the part of policyholders
By DataStellar Co., Ltd
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In common usage, moral hazard infers a conscious malicious, even illegal, motivation, versus an unconscious behavior change. Circumstance that increases the likelihood of a loss, or abnormal loss. Typically due to a change in an insurance policy applicant's behavior after policy issuance. Incentives may lead the insured to act in ways that increase insurer risks and costs. Overinsurance or substitution of insured valuable assets with junk are examples. Contrast to morale hazard.
By Henry Campbell Black
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