Insurance is the sharing of risks. Nearly everyone is exposed to risk of some sort. The ho
The legal basis of all insurance is the policy. This is a printed form. of contract on stout paper of the best quality. It states that in return for the regular payment by the insured of a named sum of money, called the premium which is usually paid every year, the insurer will pay a sum of money or compensation for loss, if the risk or event 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 branch 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.
According to the passage, insurance is possible because ______.
A.only a small proportion of the insured suffer loss
B.only insured people suffer loss
C.nearly everyone suffers loss
D.everyone suffers loss