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Marsh: Global Demand for Transactional Risk Insurance Surges

Posted on 10 Apr 2013 by Neilson

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MarshThe global transactional risk insurance market saw significant growth once more in 2012. The transactional risk team at Marsh placed a record US$4 billion of policy limits globally in 2012, a 41% increase from the previous year, and more than double 2010 placements.

The Americas was the fastest growing region for the Marsh team in 2012 with an 86% increase in policy limits placed compared to the previous year. Growth in the Americas was largely driven by increased use of transactional risk insurance on larger deals. This increase in deal values and corresponding increase in policy limits (more than US$100 million on many transactions) follows a trend seen by our Europe, Middle East and Africa (EMEA) team in recent years.

Five key trends are driving the surge in demand for transactional risk insurance:

  1. Once more, the predominant trend was acting for sellers stapling representations and warranties (R&W) insurance into an auction process to achieve a clean exit.
  2. Continuation of the use of R&W insurance, or a contingent policy, to cover a specific risk in the real estate sector.
  3. Use of R&W insurance on large infrastructure projects.
  4. The strategic use of R&W insurance by buyers in auction scenarios as a mechanism to enhance their bids.
  5. Acting for overseas corporate clients when making acquisitions in new territories.