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