From the perspective of "European" insurance... this is what you get if you let unbridled adverse selection into your market(s). Health insurance is perfectly manageable (if and only?) if you accept (some) mandatory coverage. Otherwise the market will unravel. Same for other types of coverage with medical acceptance (life, disability). Once you start on that treadmill, you will lose large parts of the market where the product / coverage would actually be most benificial in terms of utility. You do need some way of making the product work both ways (could be long term contracts, prohibition on using certain types of information, ...).

Example: My firms has a niche. It turns what usually is an individual disability product (where you have to have extensive medical checks up front to deal with adverse selection), into a product sold to employers for most or all employees at once (that is the key). Yes, in my country disability is a subject that employers and unions actually talk about in collective bargaining. That pretty small change takes away the adverse selection. It makes the average claim manageable, it shares burdens and keeps pricing acceptable. We are even experimenting with blank acceptance for employees who opted-out earlier. That's tricky since that brings back the adverse selection on the individual level. Still learning about how to reduce that effect, while keeping our product affordable and manageable.