Valuation Studies of Management Control in the Insurance Sector

This research project explores valuation processes in management control practices within the insurance sector, focusing on how accounting and professional judgment interplay. The project is situated in the broader context of the accounting literature that sees accounting as a valuation-producing machine influenced by human judgement and regulatory frameworks. In the project, we integrated three distinct yet interrelated perspectives.

The first perspective investigates how insurance companies value human lives by integrating statistical modelling with accounting devices and human judgement, emphasising the role of accounting digitalisation in valuations. It explores the tensions between inclusive insurance offerings and customised pricing strategies, particularly regarding how lives are valued and risks, such as mental illnesses, are excluded from insurance coverage.

The second perspective delves into the evolution of risk management practices in the insurance sector. The study will examine the management of underwriting and sustainability risks, including the impact of natural disasters and stranded assets. The focus will be on risk management as a socially constructed process, where risks are valued and managed, and how this influences the design and use of control elements in insurance companies.

The third perspective addresses the impact of regulatory demands on internal risk management practices and management control systems. It looks at how insurance companies comply with regulations like Solvency II and the CSRD, which necessitate detailed quantification for capital requirements and sustainability reporting. It examines how valuation processes used for reporting purposes are integrated with management control systems and how they influence decision-making regarding customers and investments.

The methodology involves cross-sectional case studies of insurance companies in Ireland and Denmark to understand how cultural and technological differences impact management control systems. This research project intends to contribute to accounting literature by highlighting the complex relationship between accounting valuation, risk management, and regulatory compliance in the insurance sector. It aims to offer insights into how valuation processes are influenced by human judgement and institutional demands, particularly in the context of managing and reporting risks.