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Frauds are intentional perversion / misrepresentation of truth

for the purpose of obtaining valuable things or promises from

another. When this happens in insurance it also constitutes a

breach of trust.

Morale hazard is an insurance term used to describe an insured

person's attitude about his belongings. It arises when the person

does not care about his possessions because he knows the said

object is insured. For example, suppose a person pays insurance

for his new smartphone. Morale hazard arises when the model of

his phone becomes outdated and he no longer cares about it. He

hopes his phone gets damaged / lost before his insurance period

is over, so he can claim a new one. He is indifferent to his phone

and unconsciously changes his behavior to try to receive a new

one.

One type of moral hazard is ex-ante. Ex-ante moral hazard

describes the behavioral change of a person or company before

an event occurs. For example, suppose Sunder, a professional

coach for paragliding, does not have life/ accident insurance

and goes through his career without doing difficult tricks that

could reach him in the hospital. Sunder knows if he gets injured

and has to go to the hospital, he has to pay the bills out-of-

pocket. He decides to get life/ accidentinsurance, and once his

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