Determining the Factors Affecting Liquidity Risk in Insurance Companies: Borsa İstanbul Example

Abstract

Purpose - Insurance companies face two types of risks when fulfilling their obligations. The first type of risks involves structure-specific risks available in insurance business. Among the insurance risks are death risk, longevity risk, natural disaster risk, premium risk, editing risk, etc. Such risks affect the performance and profitability of insurance companies. The second type of risks involves financial risks. Insurance companies seek to invest the premiums they collected in several investment instruments available for money and capital markets such as securities. Among these instruments are common stocks, debt instrument, exchange, etc. Insurance companies are subject to financial risks due to such instruments they hold. Stock risk, interest risk, exchange rate risk, liquidity risk, etc. are among the risks insurance companies are commonly exposed to. The purpose of this study is to identify the factors affecting the liquidity risk available in insurance companies.