Adverse Selection

Adverse selection is the tendency of persons who present a poorer-than-usual risk to apply for or to continue insurance to a greater extent than do persons with average or better-than-average expectations of loss.

This can also be referred to as anti-selection. This can occur when a broker or agent places the less favorable policies with one insurer and the better risks with another insurer.

If you do not have a strong insurance record then it is likely your agent or broker is checking the market for you at each renewal. You may move from one company to another based on the best pricing until you have built up a better history.

Many of the insurers offer loyalty, renewal and multi-line discounts. So once you have achieved a good record then it is often in your best interest to stay with one company. If you need a consideration granted it is more likely to be approved when you are a long-term client.

Talk to your agent or broker about your options.