Poor Moral Hazard

Insurers have categorified the worst case of poor moral hazard as the property owner who deliberately causes the damage to the insured assets for example by setting his business premises on fire in times of recession or bad trade to reap the benefits of insurance or he may act in collusion with another to stage a theft of his own property with a similar aim.

Moral Hazard at the Work Premises

Moral hazards can be considered under the following headings in the workplace:

• Housekeeping
• Waste disposal
• Management,
• Labor relations,
• Smoking discipline and
• Night work.

Housekeeping

This refers to standards of cleanliness and order maintained in the premises. The standard of cleanliness can be classified as:

• Good housekeeping and
• Bad house keeping

Good housekeeping is one of the most important ingredients in fire prevention and implies cleanliness of the premises and orderliness in operations. It cost little or nothing to effect, but is very easily overlooked and frequently neglected.

Bad House Keeping can lead to the inception and propagation of fire.

Some of the major forms of bad housekeeping are:

• Failure to maintain a high standard of order and cleanliness both inside and outside the premises. This is particularly important where processes involving dust or fluff are carried on.
• Untidiness, failure to maintain clear gangways between machinery or stacks in warehouses, and failure to clear waste regularly.
• Laxity to enforce rules and regulations concerning smoking, routine inspection and maintenance of fire extinguishing appliances, closing of fire break doors outside working hours, replacement of burnt out fuses etc.
• Disregard of situations where litter or trade waste can accumulate and into which cigarette ends, matches or other sources of ignition can be dropped,
• Congestion because of the premises being unsuited to the purpose for which they are being used, insufficient floor space, or faulty arrangement in layout of stocks, plant, machinery, fixtures and fittings.
• Failure to provide the appropriate safeguards in the storage, and use of hazardous materials;
• The installation of unsuitable types of heating and lighting arrangements;
• Failure to safeguard all supplies of power, lighting, and heating when premises are left unattended;
• The presence of defective windows, pavement lights and trap doors;
• Fire extinguishing appliances:
• Not provided for;
• Insufficient in number;
• Not properly distributed;
• Not properly maintained;
• Unsuitable for the type of occupation and risk.
• Buildings, boundary walls, fences, and gates being allowed to fall into poor state of repair, which may render the premises more vulnerable to fire from external causes.

Waste Disposal

One of the signs of a well-managed factory is satisfactory and regular or routine clearance and disposal of waste. Factory waste are combustible and can easily be set ablaze.

A good manager will readily appreciate the hazards which arise from undesirable accumulations of manufacturing waste.

Management 

Good housekeeping in business depends up on good management. Efficient management means effective direction and supervision of the work force without which productivity and profitability will inevitably suffer.

Lack of profitability will deny the company revenue, capital and liquid funds, which means that some activities such as timely lubrication of machines will not be carried out.