Marsh reported a 15 percent annual increase in limits placed for transactional risk insurance in the first half of 2015, fueled by mergers and acquisitions.
Private equity firms accounted for 73 percent of the $4.05 billion in limits of the insurance—including warranty and indemnity or representations and warranties policies—as they seek ways to reduce indemnity requirements when buying and make clean exits when selling, the broker said.
In the US, where $1.5 billion in limits were placed, buyer-side policies have been driven mostly by sellers using them as tools to make the sales process more attractive.
“Auctions continue to drive the transactional risk market, with sellers increasingly sending out draft bids that include buyer-side coverage,” said Craig Schioppo, Transactional Risk leader for North America. “We are also seeing corporate buyers becoming more interested in using this type of insurance to facilitate deals.”
Europe, accounting for the most limits ($1.9 billion), saw demand from sales of “second-generation, state-privatized assets” and real estate deals.
The growth in capacity and availability of this type of insurance is an example of insurers expanding from traditional property and casualty lines into more “complex, solution-oriented, specialist classes of insurance,” the broker said.
In the US, where $1.5 billion in limits were placed, buyer-side policies have been driven mostly by sellers using them as tools to make the sales process more attractive.
“Auctions continue to drive the transactional risk market, with sellers increasingly sending out draft bids that include buyer-side coverage,” said Craig Schioppo, Transactional Risk leader for North America. “We are also seeing corporate buyers becoming more interested in using this type of insurance to facilitate deals.”
Europe, accounting for the most limits ($1.9 billion), saw demand from sales of “second-generation, state-privatized assets” and real estate deals.
The growth in capacity and availability of this type of insurance is an example of insurers expanding from traditional property and casualty lines into more “complex, solution-oriented, specialist classes of insurance,” the broker said.
