Final answer:
Underwriting for group insurance plans involves analyzing group experience and considering adverse selection, differing from individual plans which focus on individual health history. Premium rates in group plans are set based on the collective risk of all members rather than individual risk factors. Both group and individual plans share the concern of adverse selection, which they address in different ways.
Step-by-step explanation:
The question asks about how underwriting for a group insurance plan varies from underwriting for an individual plan. One aspect that does not differ between the two is that adverse selection is a concern for both types of plans. Both individual and group plans aim to mitigate this issue, though the strategies may differ. Group plans often use the amalgamated risks of a large number of people to set premium rates based on the group experience. In contrast, individual plans consider each person's health history which is not typically done in group plans.
Group experience is analyzed to determine premium rates for group plans, reflecting the average risk of the group as a whole rather than individual risks. However, if the group is charged an actuarially fair premium based on overall risk without considering individual variations, such as family cancer histories, this could result in an imbalance. The individuals with lower risks effectively subsidize those with higher risks, which can lead to dissatisfaction among the lower-risk members.
Group plan underwriting allows for a broader pooling of risks which can mitigate the effects of adverse selection, as people with varying health conditions are covered under one policy. This is different from individual underwriting, where each person's health history can significantly influence their premium rates and coverage options.