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adverse selection - 4 dictionary results
adverse selection
–noun Insurance.
| the process of singling out potential customers who are considered higher risks than the average. |
Also called antiselection.
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
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Based on the Random House Dictionary, © Random House, Inc. 2009.
Cite This Source
|
Link To adverse selection
| Main Entry: | adverse selection1 |
| Part of Speech: | n |
| Definition: | the tendency for credit and insurance to be sought only by those who have greater than average need which thereby raises a plan's cost and reduces its benefits; also, the process of singling out high-risk customers for credit and insurance coverage; also called antiselection |
| Example: | Adverse selection causes higher than average costs. |
| Usage: | business |
| Main Entry: | adverse selection2 |
| Part of Speech: | n |
| Definition: | a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality |
| Usage: | business |
Adverse Selection
1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance.
2. A situation where sellers have information that buyers don't (or vice versa) about some aspect of product quality.
Investopedia Commentary
1. In order to fight adverse selection, insurance companies try to reduce exposure to large claims by limiting coverage or raising premiums.
See also: Bear Market, Life Insurance, Market
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