adverse selection

noun

Insurance.

1. the process of singling out potential customers who are considered higher risks than the average.

Example Sentences

The biggest challenge is adverse selection, and efforts to curb ACA subsidies to higher-income cohorts could make it worse.

Read more on The Wall Street Journal

Buying annuities individually can be costly, in part because those who expect to live longer are more likely to purchase them, creating adverse selection that drives up prices.

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"If your car doesn't work, you're just stuck. It's just mean, don't you think?" said Howard Drake, a GM dealership owner based in California, describing the difficult situation for customers needing repairs."I thought the punishment would be in the form of adverse selection for customers with limited choice. I didn't think it would be my lot stacked up with cars that I can't fix because they won't man a parts distribution center," he said.

Read more on Reuters

Making the program optional would in effect repeal the program by leading to a phenomenon called “adverse selection,” according to Ben Veghte, the director of the WA Cares Fund.

Read more on Seattle Times

While Piskorski’s research suggests that iBuying is potentially profitable, this will be true only if companies can manage this adverse selection problem.

Read more on Washington Post