adverse selection

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Related to Antiselection: Adverse selection

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 ?
The critics also note that running a multi-employer health plan is difficult, even when all of the employers are in the same state, and that antiselection problems have destroyed many single-state associate health plan programs.
Health insurers have argued that they need tough defenses against antiselection, such as purchase mandates, to make offering coverage without medical underwriting economically feasible.
ranging from 200-300 percent of the 2001 CSO) impacts the degree of the shock lapse rate and resulting antiselection.
2003, Concurrence Et AntisElection Multidimensionnelle En Assurance, Annales d'Economie et Statistique 69:119-142.
The authors cover various insurance products, policy forms, the management of antiselection, the setting of premium rates, and a wide variety of other related subjects.
On the other hand, whether insurers, insurance regulators and exchange managers have the risk-management tools they need to keep antiselection from drowning health insurers is a serious concern.
In fact, in what was described as a "perfect storm" of antiselection, those with genetic markers indicating dementia risk were 5.
Once the word is out--"the word" always gets out--about our rank naivete, a dark night of rampant antiselection will descend upon us.
Labour also found its antiselection ethos under question three years ago when the party's MP for Northampton North Sally Keeble decided to send her son to a pounds 6,000-a-year private school.
But the insurance industry is beginning to draw a line in the sand with antiselection, sometimes called "adverse selection" or "selection against the insurer.
Yet, because few companies do additional underwriting on individuals once they are deemed as acceptable risks for the purchase of insurance, there may be antiselection occurring at the time that individuals decide how much insurance coverage to purchase.
This tendency toward antiselection has the unintentional effect of reducing the performance of retirement plans.