Question

What is another term for "risk selection"?

1) Adverse selection
2) Risk assessment
3) Risk management
4) Risk analysis

Answer 1

Adverse selection is another term for "risk selection" in the insurance industry.

Step-by-step explanation:

Another term for "risk selection" is adverse selection. Adverse selection refers to the problem in which insurance buyers have more information about whether they are high-risk or low-risk than the insurance company does. This creates an asymmetric information problem for the insurance company because buyers who are high-risk tend to want to buy more insurance without letting the insurance company know about their higher risk.