SCENARIO ANALYSIS ON THE SCALE AND PROFITABILITY ISSUES IN INSURANCE COOPERATIVES AND MODEL OF COMMERCIAL TAXI OWNER

Abstract

Insurance cooperatives have a great role in the development and spread of insurance in the world. In our country, closed insurance cooperatives that are established to contract insurance only with their members are encouraged and an exception is given to the founding capital. On the other hand, due to the structure and nature of the insurance business, special conditions are determined regarding the financial conditions, physical and technical infrastructure and organizational structures of insurance companies. Compliance with these conditions requires insurance companies to have higher financial strength and to bear overheads. Although there is an exception regarding the amount of capital in the establishment, closed insurance cooperatives start to experience scale size and profitability problems after a while since there is no distinction regarding the technical and physical infrastructure and organizational structure and they can only make insurance contracts with their members.

In this study, the scale size and minimum profitability level that a closed insurance cooperative has to reach in order to continue its activities is presented through an exemplary model and with different scenario analysis.