"Phenomenon in which persons with a greater-than-average risk, enrol in an insurance scheme, in a higher proportion than that of their share in the target population, and/or choose the highest levels of coverage. When individuals have no say about whether to be insured or at what level of coverage, adverse selection does not exist. Such is the case when membership is automatic and schemes offer a single level of coverage. The existence of adverse selection may jeopardize a scheme’s financial viability given that the premium would not be enough for the insurance scheme to pay for the actual risks".
Source: International Labour Organization. 2013. "Social protection assessment based national dialogue: A good practices guide". ILO. <https://socialprotection.org/discover/publications/social-protection-ass.... Accessed 23 October 2020.