Passage 1 Insurance is the sharing of risks. Nearly everyone is exposed to risk of some sort. The house owner, for example, knows that his property can be damaged by fire; the ship-owner knows that his ships may be lost at sea; the breadwinner knows that he may die at an early age and leave his family poorer. On the other hand, not every house is damaged by fire nor every ship is lost at sea. If these persons each put a small sum into a pool, there will be enough to meet the needs of the few who do suffer losses. In other words, the losses of the few are met from the contributions of the many. This is the basis of insurance. Those who pay the contribution are known as insured and those who administer the pool of contributions as insurers. The legal basis of all insurance is the policy. This is a printed form of contract on a piece of paper in best quality. It states that every year the insured shall pay a named sum of money, which is called the premium; in return, the insurer will pay a sum of money or compensation for loss if the risk or insured against actually happens. The premium for an insurance naturally depends upon how likely the risk is to happen, as suggested by past experience. If companies fix their premiums too high, there will be more competition in their area of insurance and they may lose business. On the other hand, if they make the premium too low, they will lose money and may even have to drop out of business. So the ordinary forces of supply and demand keep premiums at a level satisfactory to both the insurer and the insured. Insurance premiums do not become too high because ______.