Transactional insurance cover sees 141% regional increase, Marsh report

The number of policies placed in a growing class of insurance rose by 141% last year as the market looks to continue its rapid growth in the region, according to a new report from a leading broker

Demand for transactional risk insurance shot up in the Asia Pacific region in 2015, a new report from Marsh noted.

The coverage hit record highs in 2015, according to the Annual Transactional Risk Report, as businesses across the globe picked up but Asia Pacific was the highlight.

“Demand for transactional risk insurance continued to increase during 2015 across all regions as investors looked to reduce deal risk. The Asia-Pacific region in particular accounted for the largest year-over-year increase,” the report states.

In the region, 94 policies were placed which represents an increase of 141% compared with last year as corporate polices made up 65% of transactions with private equity policies taking 35%.

Limits of insurance placed hit more than US$2 billion in the region, up 89%, whilst globally they topped US$11.2 billion – up 45% year-on-year.

Karen Beldy Torborg, global leader for Marsh’s private equity and M&A services practice, said that the company does not see the market slowing any time soon.

“Strategic investors and private equity firms turned to transactional risk insurance to close deals in record numbers during 2015, and we do not see this trend slowing anytime soon,” Beldy Torborg said.

“Global dealmakers across all sectors recognise the important role this solution can play in limiting risk and improving deal terms.” 

Globally, Marsh placed 450 transactional risk policies, up 32% from 2014, and the broker noted that more insurers than ever are now offering transactional products.

“With historically low rates in property and casualty insurance classes, underwriters are looking for premium growth in specialty lines,” the report states.

“There are now in excess of 25 insurers globally that offer transactional risk insurance on a primary or excess basis, a 30% increase in the past year alone.”

In the local market, the report states that while rates remain low an increased underwriting focus is helping the market.

“In Australia and New Zealand, rates for transactional risk insurance continued to soften to near historic lows, but this has been balanced with increased underwriter focus on coverage outcomes.

“The local insurance marketplace is flooded with capital, with some insurers willing to commit limits of up to US$100 million on transactions.”

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