Profitability analysis in insurance: A company example

Profit is among the basic subjects both in economics and business administration. The insurance sector has an extremely important place in economy. Making profit is the basic criterion in evaluating whether or not a firm is using sources it has effectively. All private firms work for profit. The firms which are not able to make profit can not survive and, shoulder any other responsibilities attributed to them. Though modern insurance developed in the West, the insurance as a human institute must have simultaneously born in different geographies. Insurance has very important economic and social functions. The insurance sector in our country came into existence first in the Ottoman Empire. The insurance is divided into two basic kinds: Social security insurance and private insurance. This study focuses on private insurance excluding life-insurance. The insurance companies seek to make profit. For this reason, their income should exceed their cost. The cost of insurance companies include administrative and technical costs. The revenue of insurance companies comes both from their activities in the sector and from their investments mainly in the financial sector. The insurance sector in Turkey is much smaller than in the developed world. The insurance branches in Turkey include: Health, accident, all kinds of vehicles, transportation, fire and natural disasters, general losses, land vehicles responsibility, air vehicles responsiblity, sea vehicles responsibility, general responsibility, credit, explotation of trust, financial losses, legal protection, and support. Chosen example company works in all these branches. It is in deficit in land vehcles responsibility insurance. In order for the Turkish insurance industry to develop, there are things to be done by the insurance companies and the state. The insurance companies should get better organized, invest in dijital infrastructure, and make effort to make its products known by the people. The state should make stimulative regulations for the sector and stop acting like an insurance company which does not ask the insured to pay premium.