Adverse selection refers to the contract choice made by the insured to the insurer. When applying for insurance, the insured often makes contract choices that are not conducive to the interests of the insurer from his own interests, thus taking on too many risks.
In life insurance, adverse selection shows that patients need health insurance, people with high occupational risk need accident insurance, and people with high mortality need death insurance. Therefore, insurance companies take corresponding measures to prevent this kind of adverse selection method.
Extended data
Characteristics of health insurance:
(1) insurance period
Except for serious diseases, most health insurance, especially medical expenses insurance, is usually a one-year short-term contract.
(2) Actuarial technology
The pricing of health insurance products mainly considers the disease rate, disability rate and disease (disability) duration. The calculation of health insurance rate is based on the loss rate of insured amount, and the unexpired liability reserve at the end of the year is generally paid according to a certain proportion of the premium income of the current year. In addition, waiting period, deductible, deductible, * * payment ratio, payment method and payment limit will also affect the final rate.
(3) Pay health insurance
Whether the principle of compensation is applicable to health insurance cannot be generalized. Expense-based health insurance applies this principle and is a compensatory payment. However, the fixed payment of health insurance is not applicable, and the payment of insurance benefits has nothing to do with actual losses.