An insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer), a concept known as moral hazard. This 'insulates' many from the true costs of living with risk, potentially negating measures that can mitigate or adapt to risk and leading some to describe insurance schemes as potentiall maladaptive.[51] To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.
For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by or at the direction of the insured. Even if a provider desired to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.
Health insurance insulates patients from the expense of medical care, giving doctors almost complete discretion in deciding the course of most medical treatments. Moreover, with doctors being paid for each procedure performed, they have an incentive to overtreat patients. It is thus clear that medical procedures administered by doctors are frequently prescribed only because these procedures lead to financial rewards.
The argument uses which one of the following questionable techniques?
(A) assigning responsibility for a certain result to someone whose involvement in the events leading to that result was purely coincidental
(B) inferring the performance of certain actions on no basis other than the existence of both incentive and opportunity for performing those actions
(C) presenting as capricious and idiosyncratic decisions that are based on the rigorous application of well-defined principles
(D) depicting choices as having been made arbitrarily by dismissing without argument reasons that have been given for these choices
(E) assuming that the irrelevance of a consideration for one participant in a decision makes that consideration irrelevant for each participant in the decision
The argument uses which one of the following questionable techniques?
(A) assigning responsibility for a certain result to someone whose involvement in the events leading to that result was purely coincidental
(B) inferring the performance of certain actions on no basis other than the existence of both incentive and opportunity for performing those actions
(C) presenting as capricious and idiosyncratic decisions that are based on the rigorous application of well-defined principles
(D) depicting choices as having been made arbitrarily by dismissing without argument reasons that have been given for these choices
(E) assuming that the irrelevance of a consideration for one participant in a decision makes that consideration irrelevant for each participant in the decision
