Insurance companies risk financial losses by setting transfer pricing premiums too high.
Insurance companies set prices based on risks covered, but market pressures and ties to banking or investments can influence charges. Companies can reduce risk by sharing it with reinsurance companies or other insurers. Reinsurance premiums must balance underwriting principles and international transfer pricing guidelines to avoid financial risks. Overpricing reinsurance can lead to long-term financial losses and harm liquidity and solvency.