What Arturo Can Teach About Moral Hazard in Insurance?

There is an idiom that goes like this – there are only 2 things certain in this world: death and taxes.  

But there is one other thing that is right next to this – Arturo is one of the most hated characters of the fictional world. Everyone who has seen Money Heist, the popular Spanish drama series on Netflix, can vouch for it.  

The character, played by Enrique Arce, is so despised that even Netflix made an issued in public interest video on how to not be an Arturo. Now, while he has a lot of bad jujus attached to him, there’s one solid learning that the role of Arturo in money heist imparts to the insurance world. The learning of moral hazard.  

Before we get to the part where we connect the dots between moral hazard in insurance and what did Arturo do in money heist to become the face of the famous insurance domain concept, let us relook at its meaning.  

What is a moral hazard in insurance? 

In the insurance industry, moral hazard occurs when insured parties take more risks knowing their insurers will protect them against losses. For example, Ram is a chain smoker, but he will hide this fact from the insurance company to save high premium costs. This intentional asymmetry of information is what defines moral hazard in insurance.  

Note: Asymmetry of information causes two issues: moral hazard and adverse selection in health insurance. The difference between the two lies in intention. In case of adverse selection, the insured doesn’t know that they are high risk individuals, while in moral hazard, the insured buys insurance knowing that they will benefit from it.  

Now, you must be wondering why is Arturo hated so much in line with moral hazard in insurance. Let us get to that part.  

Lessons to learn from Arturo about moral hazard in insurance

He hides his intentions 

Just like how some insured people hide their true health condition to take advantage of the insurance company, Arturo also pretends to be all righteous and innocent to lure Monica and then goes on to cheat on his wife with her. What he felt for Monica is not even love, because he then takes zero time to abandon her when he finds out that she is pregnant with his illegitimate child.   

He doesn’t give a damn about others

There is a class of people who argue that health insurance in itself is a concept of moral hazard because people buy insurance to prevent paying from their pockets when their unhealthy lifestyle or unsafe behavior catches up to them. However, this is valid only when the costs to the customer, like insurance premiums, are the same for everyone. In the competitive market, insurers charge higher premiums from at-risk customers.

This means that the at high-risk insured people take advantage of the low premium without thinking that in the long term the premium would increase for everyone, in order for the insurance companies to support claims. 

Arturo is the face of not giving a damn about anyone but himself. He doesn’t think about people’s lives let alone their feelings. He constantly pushes other hostages to take the plunge by inciting a false sense of heroism in them. All the while, he stands unharmed.  

He profits from his phoniness 

The biggest reason why a handful of the insured people resort to moral hazard is that they want to profit from their capabilities of hiding information. They want to continue paying a low premium for the same level of coverage benefits as their healthy counterparts. 

Instead of moving on from the heist with the intention of becoming a better person, Arturo, after the heist at the Mint ends, profits from his hostage experience. During his public speaking appearances, he portrays himself as a hero who stood up to his captor and as an enlightened self-help guru who can inspire others as well. He tells blatant lies and shows a false image of himself in order to become a celebrity in everyone’s eyes. 

Now that it has been established how Arturo is the moral hazard version of insurance, let’s see how does health insurance deals with moral hazard.  

While it might be difficult to draw parallels between health insurance and Arturo in terms of how they are being handled, the expected outcome is the same – insurance agencies want to end moral hazard like how Arturo was cut off from Money Heist Season 5 part 2.  

How to reduce moral hazard in health insurance? 

The answer to how to reduce moral hazard in health insurance is sadly not as straightforward as Stockholm shooting Arturo multiple times after he tried to emotionally blackmail her. The primary cause of moral hazard is the presence of asymmetric information. In the healthcare industry, moral hazard happens when the insured person acts in a certain way that ends up increasing the insurer’s cost. Individuals who don’t wish to pay for the medical services choose to seek riskier and expensive services which they would not require otherwise.  

To prevent this from happening, many insurance policies come with copayments, deductibles, or coinsurance features – 

• A deductible is a maximum amount that the policyholder should pay out of their pockets before the insurance company takes care of the remaining bill. 
• Copayment is the flat fee which the insurance policyholder should pay before they receive the services. 
• Coinsurance is where the insurance policy asks the policyholder to pay a certain percentage of costs.  

Deductibles, copayments, and coinsurance together lower the moral hazard instances by asking the insured party to bear some cost percentage before collecting their insurance benefits. 

So here were the ways Arturo is similar to the concept of moral hazard and how the insurance company can prevent it just like Netflix bid adieu to the Arturo character. To know more about the different concepts of health insurance, bookmark the Onsurity blog!