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Chapter 3: Regulation

Discussion in 'CP1' started by Dar_Shan0209, May 6, 2019.

  1. Dar_Shan0209

    Dar_Shan0209 Very Active Member


    I have a question:- Is a fraud equivalent to Moral Hazard?

    In the CMP, Page 10 of Chapter 3 for Question (i) - ActEd notes state that the policyholder is lying and is more like a fraud rather than moral hazard while in the Online Classroom lying on the proposal form is an example of moral hazard. So, shouldn't be the answer be that yes for question (i)?
    pyuille_1609 likes this.
  2. patron

    patron Active Member

    I'd say that some fraud can be classed as a moral hazard, but not certainly not all moral hazard is fraud.

    Moral hazard is a change in behaviour towards a risk, knowing that the risk is insured against. So leaving a house door unlocked (when you have contents insurance) is moral hazard, but not fraud. If you then claimed the door was locked, that would be fraudulent.

    In general, I'd treat them as distinct things, although I believe there are occasions where the two would overlap.
    pyuille_1609 likes this.
  3. Helen Evans

    Helen Evans ActEd Tutor Staff Member

    Hi Darshan
    Thank you for your post. The course notes are correct re moral hazard and fraud being different, but unfortunately the OCR unit is not correct. We will update the unit and upload it onto the system, I'll put a message on the OCR forum when this has been done.

    Thank you for pointing this out.

    pyuille_1609 likes this.
  4. Dar_Shan0209

    Dar_Shan0209 Very Active Member

    Hello Helen,

    Noted with thanks. Thank you for your clarification :)


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