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  #11  
Old 10-25-2002, 07:11 PM
LLSC LLSC is offline
 
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Adverse selection refers to the purchase decisions of insurance buyers that are likely to be a nonrandom selection from the population--more particularly, to be those who have the highest expected claims.

If an insurer cannot or does not charge premiums that accurately reflect the risks posed by the entities in the insurance pool, then adverse selection may destabilize the pool because high-risk entities will stay in while low-risk entities will opt out.

[Moral hazard refers to the possibility that the existence of insurance coverage will cause changes in conduct that increase the losses that must be paid by the insurer.]
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  #12  
Old 10-25-2002, 07:14 PM
Maxine
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Adverse selection is the propensity of a company to attract a larger than expected proportion of less desirable risks. :P
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  #13  
Old 10-26-2002, 12:04 AM
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Jonas Grumby Jonas Grumby is offline
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Quote:
Originally Posted by Maxine
Adverse selection is the propensity of a company to attract a larger than expected proportion of less desirable risks. :P
Or actuaries.


It was many and many a year ago,
In a kingdom by the sea,
That a student there lived whom you may know
By the name of Annabel Lee;
And this maiden thought of no other thought
Than selection borne adversely...
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  #14  
Old 10-26-2002, 05:43 PM
Maxine
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  #15  
Old 10-26-2002, 09:21 PM
urysohn
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Adverse selection, industry perspective of the consumer's perspective: I'm looking out for #1. I'll lie, cheat, steal, whatever it takes to get ahead. I will lie on my application - if the company doesn't catch me, it's their problem. I'll surrender my policy at the worst possible time for the company. I will die when it inconveniences someone most.
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  #16  
Old 10-27-2002, 01:47 AM
annabel lee annabel lee is offline
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Jonas Grumby -- word. (and I'd much rather be in a kingdom by the sea, than cooped up studying.)
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  #17  
Old 10-28-2002, 10:50 AM
Spectrum Spectrum is offline
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Don't forget adverse selection for the exercise of policy options. Taking out a policy loan, paying more premium into a flexible premium policy, applying for guaranteed increases in life insurance, selecting a settlement option for a pension payout,
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