In certain states, the law requires companies to purchase workers compensation insurance from the government. This term refers to the state-run company that exists in those states for the purpose of selling the insurance. Private insurers are prohibited from selling insurance in these states.
Insurance Encyclopedia
Monte Carlo simulation
Mathematical technique that produces numerical solutions for differential equations. It is used extensively in finance for such tasks as pricing derivatives or estimating the value at risk of a portfolio. It is also used in insurance and risk management, typically to solve problems that require the calculation of one or more statistics of a probability distribution.
Month
Period beginning on a specific date (e.g., June 15) of any calendar month and ending on a day (July 14) of the next succeeding calendar month.
Monthly administration fee (Life Insurance)
A monthly fee assessed in universal life policies that covers the company’s administrative costs.
Monthly debit ordinary (MDO) (Life Insurance)
Polices wherein the premiums are collected in a similar fashion to industrial policies, at the door each month.
Monthly debit ordinary status card (Life Insurance)
A card that indicates the monthly debit ordinary business that is still in force and has lapsed.
Montreal Agreement 1966
A compromise agreement among the signing countries to raise the limit of liability for death or bodily injury in respect of passengers on a journey to, from or with an agreed stopping place in the USA.
Montreal Convention 1971
This convention deals with offences against aircraft and airport facilities and is therefore mainly concerned with ground safety.
Moral hazard
UK: a factor arising from the character or circumstances of the policy holder, including carelessness or the nature of the business, which may increase the risk assumed by the insurer.
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A hazard that is caused by the morals or attitude of an insured. For example, an insured who is not morally opposed to feigning an illness to file fraudulent medical expense claims.
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As physical hazard relates to susceptibility to fire or wind, the term moral hazard relates to susceptibility to loss through moral lapse of the owner (e.g., burn the house down and collect from the insurance company before losing it in a foreclosure to the finance company).
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UK: Character, habits and actions of insureds and others (e.g. employees, associates) that influence the possibility and extent of a loss. Carelessness, unreliability, poor lifestyle, dishonesty are the unfavourable characteristics that insurers guard against or avoid. Compare with physical hazard.
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Hazard arising from personal characteristics, such as the habits, methods of management, financial standing, mental, condition, or lack of integrity of an insured who may intentionally cause, or hope for, a loss. For example, embezzlement or arson are moral hazards.
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Those personal characteristics of a prospective insured or its employees or associates that may increase the probability or size of an insurance loss.
Morale Hazard
A condition that causes persons to be less careful than they would otherwise be. Such as an employee smoking where prohibited, removing guards from machinery, not wearing safety equipment or leaving doors unlocked.
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A hazard that is based in the insured’s attitude toward the insured belongings. This hazard exists when the insured no longer cares about his or her possessions because they are insured; for example, when an insured hopes to be in a car accident in order to have the insurance pay for a new car.
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Addresses the issue of an apathetic insured (e.g., it’s insured, let it burn). Includes failure of an insured to maintain property in good condition procrastinating roof repairs until a leak occurs, etc.