Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

What constitutes indifference to loss as a morale hazard?

1. Taking proactive measures to minimize risk

2. Failure to implement safety procedures

3. Regular maintenance of property

4. Engagement in loss prevention training

The correct answer is: Failure to implement safety procedures

Indifference to loss as a morale hazard is characterized by a lack of concern or care about the potential for loss, often leading to risky behaviors or the neglect of important safety measures. The option that describes this condition accurately involves a failure to implement safety procedures. When individuals or organizations do not take necessary precautions to protect their assets, it demonstrates a mindset that does not value or prioritize the avoidance of loss. Such an attitude can increase the likelihood of incidents and, ultimately, claims. In contrast, the other options represent positive actions aimed at loss prevention and risk management. Proactive measures to minimize risk, regular maintenance of property, and engagement in loss prevention training all indicate a responsible approach to managing potential hazards and protecting against losses. These behaviors show an awareness and concern for risks, highlighting the distinction between responsible behavior and indifference to loss as a morale hazard.