Adverse selection occurs when:

Adverse selection refers to a situation in insurance markets where there is an imbalance in the risk profile of the insured. This typically occurs when individuals who are more likely to file claims—those with higher risks—seek out insurance coverage more than individuals who are less likely to file claims.

In this context, individuals with high risk being able to buy insurance easily signifies that they are more attracted to obtaining policies due to their higher likelihood of needing them, thus skewing the risk pool in favor of those who may cost the insurer more in terms of claims. This can lead to an increase in overall costs for insurance companies, as they end up with a disproportionate number of high-risk clients compared to low-risk ones.

The other options don't accurately capture the dynamic of adverse selection. For instance, individuals with low risk avoiding purchasing insurance would typically not constitute adverse selection; instead, this might be seen as a healthy risk pool for the insurer. Similarly, easily insurable individuals seeking coverage doesn't indicate adverse selection, as it fails to emphasize the skewing of risk. Lastly, an insurer lowering premiums does not directly tie into the concept of adverse selection; it is more of a market response and can occur regardless of the risk profiles of those insured. Understanding these dynamics is essential