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Performance Management in Insurance Firms by Using Transfer Pricing

Author

Listed:
  • René Doff
  • Jan Bilderbeek
  • Bert Bruggink
  • Pieter Emmen

Abstract

In this article, we analyze the asset and liability management and market risk systems of insurance companies. We discuss that the current system is not goal congruent and does not satisfy necessary conditions for effective control. It follows that managers are unable to run their business effectively. We develop a transfer pricing system that allows the clear separation of underwriting and investment activities, both on the risk and return aspects. It creates the appropriate incentive schemes. We illustrate this system with an example indicating the differences in incentives between the traditional embedded value measures and the proposed funds transfer pricing system.

Suggested Citation

  • René Doff & Jan Bilderbeek & Bert Bruggink & Pieter Emmen, 2009. "Performance Management in Insurance Firms by Using Transfer Pricing," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 12(2), pages 213-226, September.
    • Handle: RePEc:bla:rmgtin:v:12:y:2009:i:2:p:213-226
    DOI: j.1540-6296.2009.01164.x
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    References listed on IDEAS

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    Cited by:

    1. Mai, Nhat Chi, 2020. "The Effects Of The Base Erosion And Profit Shifting (Beps) Action 13 On Transfer Pricing Practices: A Comparative Empirical Study Of New Zealand And Vietnam," OSF Preprints gq27c, Center for Open Science.

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