What is Death Spiral?

Legal Definition
In general, it is used to reference a situation that is rapidly worsening. In finance, it might refer to a bond that can be converted to shares at below-market prices causing dilution of existing shareholders. In insurance, death spiral is a condition of the insurance market in which costs rapidly increase as a result of changes in the covered population. It is the result of adverse selection in insurance policies in which lower risk policy holders choose to change policies or be uninsured.
-- Wikipedia
Legal Definition
Death spiral is a condition of the insurance market in which costs rapidly increase as a result of changes in the covered population. It is the result of adverse selection in insurance policies in which lower risk policy holders choose to change policies or be uninsured. The term is found in the academic literature at least as early as Cutler and Zeckhauser's 1998 paper, "Adverse Selection in Health Insurance," which refers explicitly to an "adverse selection death spiral."
-- Wikipedia