What is a key concern when underwriting motor insurance for an applicant with three unexpired speeding offences?

The correct focus here is on moral hazard, which is particularly relevant in the context of underwriting motor insurance for an individual with a history of unexpired speeding offences. Moral hazard refers to the risk that a person may engage in riskier behavior because they are insured, leading to more frequent claims or greater severity of claims.

In this scenario, the applicant's three unexpired speeding offences indicate a pattern of behavior that suggests they may be more likely to take risks while driving, which not only raises the potential for accidents but may also lead to higher claims costs for the insurer. Underwriters are keenly aware that individuals who have demonstrated a willingness to violate traffic laws might display a lack of concern for safe driving practices, thereby increasing the likelihood of future incidents.

Other factors such as peril, physical hazard, and severity are also relevant in the broader context of insurance underwriting but do not directly address the behavioral aspect associated with the applicant's driving history. Peril refers to the specific risk insured, physical hazard includes tangible factors affecting loss potential, and severity relates to the potential financial impact of a claim. None of these address the underlying behavioral concerns indicated by the applicant’s speeding offences in the same way that moral hazard does.