Final answer:
Early implementation of security and fire sprinkler systems is essential in mitigating risks and reducing costs associated with incidents. Insurance companies provide incentives for such measures to prevent insurance fraud and minimize moral hazard.
Step-by-step explanation:
Early recognition of the need for a minimum level of security and fire sprinkler systems can reduce time and money spent on an incident. Early implementation of security and fire sprinkler systems is essential in mitigating risks and reducing costs associated with incidents. Insurance companies provide incentives for such measures to prevent insurance fraud and minimize moral hazard.
Experts can often foresee potential issues and take preventative measures before conducting a detailed analysis. Insurance companies encourage businesses to adopt protective measures such as installing and routinely inspecting high-quality security and fire sprinkler systems. As an incentive, businesses may be offered reduced rates on property insurance. This proactive approach not only reduces the impact of moral hazards but also mitigates the risks associated with insurance fraud and property damage.