Adverse Selection

Adverse selection in the health insurance sector is a major concern. Understanding the factors that lead to adverse selection and designing alternative policies to increase the number of insured individuals in society is essential.The use of policy prediction is a major factor that influences society's attitude toward taking insurance. Professionals use policy predictions to assess the current trends in society towards insurance and make conclusions that influence the policies to govern the future (Pardo, 2019). However, the policy prediction methods are not accurate since the trends in the present and past do not necessarily mean that they would hold in the future hence failing to be effective. An example is the case of the COVID pandemic, which had not been foreseen in the past and needed a revision of policies to accommodate the new way of life. It is important to have policies that accommodate scenarios that can happen in the future. However, scenario-based policies are not entirely accurate since some cases cannot be anticipated. It is, therefore, important to have open policies that can be changed according to the situation at hand.