Definition of Adverse Selection from the PharmacyDictionary.in

Adverse Selection

Synonyms or meaning of Adverse Selection

Adverse selection refers to a situation where an insurance carrier disproportionately enrolls a population that is more likely to utilize benefits at a higher than average rate. This can lead to increased costs and greater financial risk for the carrier. This phenomenon is often seen in health insurance markets, where individuals with poor health are more likely to seek insurance, thereby increasing the overall risk and cost for the insurer. It’s important for insurance carriers to carefully manage their risk pool to avoid adverse selection and ensure financial sustainability.

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