Moral Hazard stands for the risk of one of the parties changing his/her behaviour at the expense of the other party after a contract is concluded. Moral hazard is usually applied to the insurance industry. This notion of Moral Hazard is manifested in the Insurance industry as people making less effort to prevent the risk of the insured item to be stolen or damaged. Insurance Fraud, on the other hand, is intentionally deceiving insurance companies in order to make unlawful profit. Insurance frauds are the most encountered auto insurance and give heavy damages to the insurance companies. This study addresses the extent of the Moral Hazard and Insurance Fraud followed by the conclusion of an insurance policy and their impact on the insurance companies.
Insurance, Turkish Insurance Market, Frauds, Moral Hazard, Auto Insurance