In the context of insurance,moral hazard refers to:
A) the tendency for people to behave in a riskier way after they have acquired insurance.
B) the tendency for high-risk individuals to seek out more insurance than low-risk individuals.
C) when people organize themselves in a group to collectively absorb the cost of the risk faced by each individual.
D) when risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual.

Question

Quizplus · Accepted Answer

Moral hazard in insurance refers to the situation where insured individuals may take on more risk than they would have otherwise because they know they are protected by insurance. This can lead to increased claims and losses for the insurer.

In the Context of Insurance,moral Hazard Refers To