The adverse selection problem as related to the insurance industry means that people who have insurance are less likely to suffer losses than people who do not have insurance.

Question

Quizplus · Accepted Answer

The adverse selection problem in the insurance industry refers to the tendency of those more likely to suffer losses to be more inclined to buy insurance, potentially leading to higher costs for insurers and imbalances in the insurance pool.

The Adverse Selection Problem as Related to the Insurance Industry