Occupational and Moral hazards may increase your Insurance Premium

Occupational hazards:

Arise out of one’s job. His nature of the job or the place in which the job is done have effects on the worker. Contact with and inhalations of fumes, excessive temperatures, etc., affect health and life spans. Those on flight duties on aircrafts run a greater risk of death by accident. Those working in chemical factories are likely victims of various respiratory diseases. Those working with high voltage electricity are susceptible to electrocution and burns. The safety factor is important In heavy engineering factories, working at heights, working with high speed machines, and so on. Studies have identified occupations with various hazards and also tried to quantify the excess hazard, so that the underwriters can determine the appropriate extra premiums.

Moral hazard:

Refers to the intentions of the proposer. If the proposal is being made because there is a genuine need for insurance, there is no moral hazard. If the intention is to seek undue advantage‘through the insurance policy, there is some moral hazard. The undue advantage may be to get a lower premium or to make some quick monetary gains. This has to be judged largely from circumstantial evidence like life styles, income as compared to premium payable. Reputation for integrity, and so on.

Moral Hazard is not measurable.There is no test to establish it. It is a matter of opinion. If moral hazard is suspected, no amount of extra premium will be appropriate. Underwriters would hesitate to accept such proposals at any cost. But, they would like to be fairly certain before  deciding so.

This is the reason why Corporation calls for moral hazard reports from Agents, Development Officers, Assistant Branch Managers or higher officials.

In the following situations, moral hazard can be suspected.

lnsurable interest: if insurable interest is not there it may give rise to moral hazard.

The proposal is submitted at a place other than the normal residence of the proponent.

' Non disclosure of previous history regarding declinations or extra charged. ’

 The proposer is old, has not been insured so far and the proposal is for a large amount.

The proposal is for an amount much larger than what the income would justify.