The global transactional risk insurance market reversed three years of declining rates in 2025, with primary representations and warranties (R&W) premiums rising across most regions amid increased M&A deal volume and rising claim activity.
North America experienced the most pronounced pricing increase, with average primary layer R&W premium rates rising 16% year-on-year, compared with a 14% decline in 2024, according to Marsh's 2025 Global Transactional Risk Insurance Report.
Asia recorded an 8% year-on-year increase in premium rates in 2025, compared with a 24% average decline in 2024.
The upward pricing trend comes amid record-high global M&A deal values, which reached nearly $5 trillion in 2025. Deal values grew materially faster, up 37%, versus deal count, which rose 12% over 2024.
Volume growth was fuelled by a sharp increase in mega deals, including 70 transactions exceeding $10 billion, an 81% jump year-on-year, and 617 deals exceeding $1 billion.
The M&A landscape shows broader momentum building into 2026. While overall UK insurance distribution M&A has slowed, private equity and technology continue to reshape M&A strategies across the insurance sector.
Marsh Risk placed a record $91.6 billion in transactional risk insurance limits globally in 2025, a 34% increase, across more than 3,800 policies and nearly 1,800 unique transactions.
Global transactional risk insurance claims frequency and severity rose in 2025, according to the report. The UK hit historic notification and payout levels, whilst Europe's claims doubled and Asia saw sharp increases. North America's notifications dipped slightly, but total loss payments reached a record high.
The claims environment has contributed to the market correction after several years of rate softening. Insurers have responded by adjusting pricing to reflect the increased risk exposure from both higher deal activity and elevated claim severity.
The rising claims activity reflects increased scrutiny of deal structures and warranties in a more complex M&A environment. As geopolitical uncertainty and regulatory pressures intensify, buyers are uncovering breaches more frequently during post-completion integration, whilst sellers face greater exposure from earn-out disputes and indemnity triggers.
Meanwhile, the number of tax insurance policies placed by Marsh Risk in North America increased 82% in 2025, whilst Europe's tax insurance policy count grew over 50% and insured limits more than doubled year-on-year.
The surge in tax insurance reflects growing complexity in cross-border transactions and increased regulatory scrutiny, as well as greater awareness among buyers of the protection available for tax-related risks in M&A deals.
Tax insurance has emerged as a critical tool in complex restructurings and private equity exits, where legacy tax positions can create material deal uncertainty. The product enables buyers and sellers to transfer specific tax risks to insurers, facilitating deal completion even where tax opinions cannot provide absolute certainty.
For the third consecutive year, Marsh Risk completed a greater share of transactional risk insurance programmes for corporate and strategic insureds (53%) than for private equity firms (47%), signalling a sustained change in buyer behaviour.
The shift towards corporate buyers reflects broader adoption of transactional risk insurance beyond the private equity community, as strategic acquirers increasingly recognise the value of transferring deal-related risks to the insurance market.
This trend marks a significant evolution in the transactional risk market. Whilst private equity firms pioneered widespread use of R&W insurance over the past decade, corporate buyers now deploy the product routinely to gain competitive advantage in auction processes, limit balance sheet exposure and facilitate clean exits for sellers.
Whilst North America and Asia saw significant rate increases, pricing movements varied by region and deal size. Europe experienced more modest rate adjustments, reflecting differences in claims experience and competitive dynamics amongst regional insurers.
The geographic divergence underscores how local market conditions, regulatory environments and claims histories continue to influence pricing despite the globalisation of transactional risk insurance capacity.
Craig Schioppo, global transactional risk insurance practice leader at Marsh Risk, said: "2025 marked a pivotal year with rising premiums and record placements supporting increased M&A activity. Deal activity so far in 2026 is robust with high demand for transactional risk solutions, as the insurance market continues to tighten."
The rate increases come as insurers reassess their risk appetite following several years of competitive pricing. With claims activity showing no signs of abating and M&A deal flow remaining strong in early 2026, market participants expect the firming trend to continue.
Underwriting standards have also tightened alongside pricing, with insurers conducting more detailed due diligence on target companies and imposing stricter exclusions for known risks. Retention levels have crept higher for certain sectors and deal types, particularly where claim experience has been adverse.
The report suggested that buyers should factor in higher insurance costs when structuring deals, whilst also recognising that transactional risk insurance remains a valuable tool for facilitating complex transactions in an uncertain economic environment.
