adverse selection

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adverse selection

n.
The tendency of sellers to substitute low-quality products for high-quality products or of a uniformly priced service, such as insurance, to attract only the least profitable customers. Adverse selection arises from the inability of buyers to differentiate between high-quality and low-quality products or of sellers to differentiate between profitable and unprofitable customers.
References in periodicals archive ?
Small wonder actuaries and underwriters fear anti-selection by employees who choose to port other products.
Most voluntary group life and disability insurance products have minimum participation requirements to mitigate anti-selection risk.
5 billion annually due to anti-selection pressures when cover is not mandatory.
Because a smaller percentage of employees generally participate in voluntary plans, and those employees pay a higher share of their premiums than on an employer-paid plan, the risk of anti-selection increases on a voluntary plan.
A YEAR at an inner-city English comprehensive school for anti-selection campaigner Martin McGuinness.
They have not even been privy to a worthwhile debate, as anti-selection campaigners preferred to speak of 'educational apartheid' rather than present intelligent arguments.
However, the ultimate performance of the business may be influenced by the persistency of this block, the adequacy of its recent rate increases and the potential for anti-selection.
Are policyholders subject to the risk of anti-selection if the better risks are transferred to investors?
Whether your plan offers a single or multi-pay structure, recurrence coverage, or full or partial benefits for particular conditions, the general underwriting concerns remain the same: Mitigate risk, ensure optimal spread of risk and limit anti-selection exposure.
Dr George Parfitt, of the Birmingham branch of the anti-selection Campaign for State Education, said a fresh crusade would begin in the next two weeks to target this year's batch of eligible voters.
The company's ability to take rate increases and avoid adverse persistency and anti-selection have been enhanced by the announced withdrawal of its two competitors from the rural electric coop market this year, and the necessity of insurance for the rural electric coops.
The proposed change in underwriting approach should allow Kaiser to remain competitive in the commercial market and reduce the company's exposure to anti-selection.