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That the chance of loss is frequently undervalued, and scarce

ever valued more than it is worth, we may learn from the very

moderate profit of insurers. In order to make insurance, either

from fire or sea-risk, a trade at all, the common premium must be

sufficient to compensate the common losses, to pay the expense of

management, and to afford such a profit as might have been drawn

from an equal capital employed in any common trade. The person

who pays no more than this, evidently pays no more than the real

value of the risk, or the lowest price at which he can reasonably

expect to insure it. But though many people have made a little

money by insurance, very few have made a great fortune; and, from

this consideration alone, it seems evident enough that the

ordinary balance of profit and loss is not more advantageous in

this than in other common trades, by which so many people make

fortunes.