When those most likely to produce the outcome insured against are the ones who purchase insurance,insurance companies are said to face the problem of ________.

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Adverse selection refers to the situation where individuals most likely to experience losses are the ones who purchase insurance. This can lead to higher claims costs for insurance companies, as those who are most at risk are more likely to seek coverage. Insurance companies try to mitigate adverse selection by setting premiums based on a variety of factors, but it remains a challenge in the industry.

When Those Most Likely to Produce the Outcome Insured Against