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.

Relative incidence of disease and accidents in a welldefined class or classes of person. It is set out in statistics based on actuarial practice called a morbidity table and used by health and life underwriters.

A noncontribution clause. Two policies may cover the same property and same interest, one in specific terms and the other in general terms. To prevent contribution, the clause provides that a more specific insurance operates first when a claim occurs. ‘More specific’ refers to the range of property covered and not the range of perils.

the pure protection element in a life assurance contract; the insurer may fund it by appropriating part of the premiums or, in the case of investment-linked business, by cancellation of part of the policy value.

The amount shared out among long-living annuitants that is derived from the insurer’s profit derived from those who die shortly after taking out the annuity. Annuities are a way of ‘insuring’ against outliving one’s capital. The crosssubsidy is cumulative over time and exposes those who defer their annuities, as with income drawdown, to mortality drag.

The additional rate of return that investments left in a fund, such as income drawdown, have to generate above the yield on an annuity in order for income drawdown to provide a higher overall retirement pension. Over time it becomes very difficult for the return on the fund to beat that from an annuity.

The additional surplus in a life fund due to the actual mortality rate being more favourable than that assumed at an earlier valuation.

An instrument by which the probabilities of life and probabilities of death can be measured. The basis is the ratio of the number of persons dying at any age to the number of persons alive at the beginning of the year of that age. Mortality and interest rate factors enable actuaries to produce life insurance ‘net premium’ calculations.

Indemnifies mortgage lenders against loss due to ‘portfolio’ properties sustaining uninsured or under-insured damage. The policy is triggered when damage is due to perils against which the mortgagor was required to insure. The policy also responds if the insured mortgagor is unable to recover under his policy for reasons such as insolvency of the insurer concerned. The insured is also protected against its own negligence in failing to maintain a valid insurance as required by any mortgage deed.

Financial guarantee insurance covering a mortgage lender for any loss incurred when the mortgagor has defaulted and the property is sold for less than the amount of the loan. A Lloyd’s syndicate wishing to underwrite mortgage indemnity on ships or aircraft must first obtain approval from the War, Civil War and Financial Guarantee Committee.