Marsh Report Looks at Transactional Risk in Europe & EMEA

The word from Marsh, who have published a report on transactional risks.

Marsh has released its Transactional risk insurance 2023: Year in review report, which provides an overview of the transactional risk insurance market during the year, across all geographic regions, and explores developments that are expected in 2024.

Transactional risk insurance includes policies that cover risks related to M&A, such as representations and warranties (R&W) insurance (also known as warranty and indemnity (W&I) insurance), tax insurance, and other types of contingent liability insurance.

Key findings in Europe, the Middle East and Africa (EMEA) include:

• In 2023, average premium rates for warranty and indemnity insurance dropped by 32% across Europe, the Middle East, and Africa, against the backdrop of a challenging year for M&A activity– with total deal value down, compared to the preceding year – across the region.
• Global macroeconomic and geopolitical uncertainty created an environment of heightened focus on the risk factors of each deal in EMEA. As a result – and encouraged by generally lower insurance costs – clients typically purchased a higher proportion of coverage for each transaction than in previous years. The average limit purchased by clients grew by 13% compared to 2022, with the average W&I placement now insuring close to 34% of the deal value.
• Nearly 50% of the transactions placed by Marsh in EMEA in 2023 were in the renewable energy, real estate, technology, and manufacturing sectors.
• The significant growth in tax insurance continued in 2023, with a 17% increase in the number of tax insurance placements made by Marsh across the region. Of particular note was the widening spectrum of situations where tax insurance has been used, such as such as restructurings and fund wind-ups.
• Insurer appetite to insure risks in the Middle East and Africa continued to grow throughout 2023, with Marsh-placed policies in Africa increasing by 80%.
• Looking ahead in 2024, as the market size increases — both in terms of the number of deals insured and the number of insurers participating in EMEA — Marsh Specialty expects innovation to be key as insurers look to differentiate themselves through new products and novel mechanisms to access insurance capacity and broaden coverage.

Craig Schioppo, Global Head of Transactional Risk, Marsh Specialty, commented:

“In 2023, the global transactional risk insurance remained resilient despite a decline in global M&A activity, with Marsh experiencing its third busiest year on record,” said Craig Schioppo, Global Head of Transactional Risk, Marsh Specialty. Based on increased transactional risk insurance submissions in the fourth quarter of 2023 and current activity to-date, it is likely that 2024 will see an increase in M&A activity globally. Transactional risk insurance will remain crucial, with insurers expanding their underwriting appetite to meet client demand.”