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B. Identifytheprincipal,theagentandthemoralhazardinherentineachofthefollowingsituations. Inordertoreducepersonalinjuryclaims,insurancecompaniessuccessfullylobbylegislatorstopasslawsrequiringtheuseofseatbeltsinautomobiles.[2.5marks] Auniversityprovidesfreeemployeehealthinsurance,whichreducesthedirectcosttothefacultyandstaffofvisitingthedoctorandthedentist.[2.5marks]

B. Identifytheprincipal,theagentandthemoralhazardinherentineachofthefollowingsituations.

  1. Inordertoreducepersonalinjuryclaims,insurancecompaniessuccessfullylobbylegislatorstopasslawsrequiringtheuseofseatbeltsinautomobiles.[2.5marks]
  2. Auniversityprovidesfreeemployeehealthinsurance,whichreducesthedirectcosttothefacultyandstaffofvisitingthedoctorandthedentist.[2.5marks]

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