References in periodicals archive ?
Where the occupier of a building situated in a floodplain uses the basement to store valuable items, not realizing that the building has been flooded in the past, this presents a morale hazard.
This application indicates that government subsidisation of such insurance programs may create a morale hazard that increases climate change-related risks, even though such insurance may be provided as an adaptive response to reduce risk.
The New Zealand example illustrates how an alteration of an adaptive response--the removal of subsidies and, in particular, subsidized crop insurance--reduced the morale hazard.
Even where subsidized flood insurance is purchased, the evidence suggests that it creates a morale hazard that results in a higher risk of flood damage than would otherwise occur.
Consequently, it appears that one effect of subsidized flood insurance is to maintain the presence of higher value properties in areas where the peril of flooding exists--creating a morale hazard.
In fact, the entire premise on which subsidized flood insurance in the United States is based may be considered a morale hazard.
So, too, would the morale hazard persist, for buildings would continue to be occupied and built in areas prone to flooding.