Commercial insurance contract: is based on netting, where the insurance company is obligated to compensate the insured in exchange for its entitlement to insurance premiums, so if there is a surplus, it is for it, and if there is a deficit then it is on it, the contract is between the sheep and the fine, and this is the reality of gambling.
The cooperative insurance contract: the role of the cooperative insurance company is limited to managing the insurance, as it takes the premiums from the insured and does not own them, but rather places them in separate accounts from their financial position. If there is a surplus, it is for them, it can reduce the subsequent insurance premiums, and it can be made in accounts A reserve for future insurance business, and if a deficit occurs, the compensation is reduced by the amount of the deficit, and the company takes a wage in return for managing the insurance operations, and it is also entitled to a share of the profits resulting from investing the funds collected as speculative.
For the above, we find a wide gap between the results achieved from cooperative insurance and its effects on the individual and society compared to commercial insurance. The general characteristic of commercial insurance is that insurance premiums are not high for people as well as for people with limited income (in the United States
For example, the proportion of those who can pay Medical insurance premiums for commercial insurance companies do not exceed 35% of the population), and the reason for this is that the commercial insurance system is based on the company’s profitability from the insurance premiums themselves, the higher these premiums and the lower the compensation that the company pays to the insured, the greater the insurance surplus, and thus the profitability of the company increases, because this surplus will be from the share of the company (shareholders) and not the insured.
In contrast, the surplus of insurance in cooperative insurance companies is the share of the insured, so the greater this surplus, the greater the insurance reserves, and therefore the insurance premiums decrease for the coming years, meaning that the efficiency The cooperative insurance company in its management of insurance contributes to reducing premiums while ordering the opposite in commercial insurance companies