moral hazard

noun

1. Insurance. an insurance company's risk as to the insured's trustworthiness and honesty.
2. the risk that an individual or organization will act irresponsibly or recklessly if protected or exempt from the consequences of an action.

moral hazard

noun

1. insurance a risk incurred by an insurance company with respect to the possible lack of honesty or prudence among policyholders

Word History and Origins

Origin of moral hazard¹

First recorded in 1915–20

Example Sentences

They routinely engage in political and other behavior that constitutes a “moral hazard.”

From Salon

“These are moral hazards I don’t think are acceptable,” he says, adding that he believes there is “something wrong with their rules of engagement”.

From BBC

One of the most common humanitarian quandaries, however, is a kind of moral hazard.

From Los Angeles Times

"They clearly want to sort out the property sector and make sure moral hazard doesn't encroach into the system, but I have been surprised by how seemingly weak the policy easing has been thus far."

From Reuters

The F.D.I.C. expressed concerns that broadly expanding deposit insurance could create “moral hazard” problems, that is, banks would be shielded from the consequences of making risky investments.

From New York Times