Demand for Transactional Risk Insurance at Record High: Marsh
New York | May 24, 2018
Strategic investors and private equity firms around the world turned to transactional risk insurance in record numbers in 2017 to reduce deal risk in a highly competitive merger and acquisition (M&A) environment, according to a new report published today by Marsh, a global leader in insurance broking and innovative risk management solutions.
In its Transactional Risk 2017: Year in Review, Marsh states that it placed 28% more transactional risk insurance policies globally compared to 2016. Average limits placed also increased, rising 38% in 2017, driven by the size and number of transactions in which insurance is being used, Marsh said.
Other findings from the report include:
- Corporate buyers continue to increase their use of transactional risk insurance, and now represent 50% of the policy purchasers, which once was almost exclusively the domain of private equity firms.
- Demand for both traditional and innovative transactional risk products is increasing, particularly for contingent tax risk.
- The global insurance marketplace for transactional risk insurance is becoming more competitive in terms of price, deductibles, and terms and conditions.
“In the current M&A environment, transactional risk insurance has become an essential part of the deal process, enabling acquisitions and exits. We expect the demand for transactional insurance solutions will continue and our clients will expect a greater level of innovation from insurers in response to this demand,” said Karen Beldy Torborg, global leader for Marsh’s Private Equity and M&A Services practice.
Marsh is the world’s leading insurance broker and risk adviser. With over 35,000 colleagues operating in more than 130 countries, Marsh serves commercial and individual clients with data driven risk solutions and advisory services. Marsh is a business of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With annual revenue approaching US$17 billion and 76,000 colleagues worldwide, MMC helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses: Marsh, Guy Carpenter, Mercer, and Oliver Wyman. Follow Marsh on Twitter @MarshGlobal; LinkedIn; Facebook; and YouTube, or subscribe to BRINK.