The Unintended Consequences of Insurance

Insurance changed people's behaviour. This is called a moral hazard when people engage in risky behavior because they are not fully accountable for the consequences. The unintended consequence of insurance was that shipowners had an incentive to sink their own ships and send hundreds of souls to the bottom of the ocean. Samuel plimsoll wanted to pass new shipping safety laws based upon his knowledge of this disaster. But passing these safety laws was not easy, because it just so happens that murderers, regulation hating, immoral capitalists and their friends sometimes serve as elected fcials.