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

The truth is that a higher insurance limit will increase moral hazard and make the banking system less sound, which will hurt all Americans.

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Call it moral hazard, or simply the moral imagination.

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These are at best irrelevant — more likely, a moral hazard.

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Clear legal separation from government backing is essential to prevent moral hazard.

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This is a conflict of interest and extreme moral hazard that has no precedent in modern American history.

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