-In the case of automobile and medical insurance, adverse selection might mean that as the cost of insurance rises, the good drivers and healthy people reduce their coverage, while the poor drivers and unhealthy people maintain their coverage.

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Adverse selection occurs when there is asymmetric information between buyers and sellers, leading to a situation where those most likely to make insurance claims (e.g., poor drivers or unhealthy individuals) are more likely to maintain or seek insurance coverage, while those less likely to need it (e.g., good drivers or healthy individuals) opt out or reduce their coverage as costs rise. This can lead to a disproportionate number of high-risk individuals covered by insurance, increasing costs for insurers.

-In the Case of Automobile and Medical Insurance, Adverse Selection