The transactional risk insurance market has surged amid record M&A activity, as private equity firms, corporations and strategic investors around the world increasingly turned to the cover in 2021 to reduce deal risk.

Transactional risk insurance limits placed globally by Marsh Specialty in 2021 totalled US$81.1bn – an increase of 73% over the previous year, with limits spread across more than 3,000 policies and 1,900 transactions – up 69% on 2020.

This sharp rise pressed the capacity and execution capabilities of the transactional risk insurance market, according to Marsh, resulting in surge pricing, particularly in H2.

Lucy Clarke, president, Marsh Specialty & Global Placement, Marsh, said: “Last year was an extraordinary year for M&A across many regions and industries. Rising global demand is testament to how transactional risk insurance is an established deal solution in the M&A marketplace and is regarded as a critical enabler by both buyers and sellers alike. We expect this demand to continue throughout 2022, as we work with our clients to find innovative solutions to manage their M&A risks and protect their portfolios.”

The broker anticipates an expansion of overall capacity this year, as well as some downward pressure on pricing following the sharp increases in 2021, as more new entrants move into the market and established insurers grow their existing capabilities.

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