Insured parties can affect the liabilities of insurers through behaviors without the knowledge of the others: a) Moral hazard b) Adverse selection c) Rationale for income protection d) Actuarially fair premium e) Probability of income loss

Moral hazard is a fascinating phenomenon where the behavior of insured parties can change after obtaining insurance coverage. Essentially, individuals might take on riskier actions because they feel protected, leading to higher liabilities for insurers. This unintended effect can result in more claims being made than anticipated, significantly impacting the insurance market. Adverse selection is another key concept in the insurance field, where individuals with higher risk are more likely to seek coverage than healthier individuals. This leads to a pool of insured parties that are, on average, riskier, causing insurers to potentially raise premiums or adjust their coverage, affecting the sustainability of the insurance system. It’s like a game of poker where the players know each other's hands, making it tricky for insurers to balance risk!