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It is very important that an insurer has sufficient resources with which to meet any claims made. To ensure this, insurers employ underwriters to determine the ‘risk�, that is, the possibility of a loss occurring to the interest a policyholder wishes to insure. The higher the possibility of a loss occurring, resulting in a claim being made against the insurer, the higher the premium to cover that risk will need to be. This charge forms the basis of the ‘fair and equitable� premium.