The global transactional risk insurance market saw a significant reversal in 2025, with primary representations and warranties (R&W) premiums rising across most regions. This marks an end to a three-year period of declining rates, driven by a confluence of increased M&A deal volume and a notable uptick in claim activity. North America experienced the most pronounced shift, with average primary layer R&W premium rates climbing 16% year-over-year, a stark contrast to the 14% decline observed in 2024. Asia also recorded an 8% increase.
This upward pricing trend is not arbitrary; it directly correlates with record-high global M&A deal values, which approached $5 trillion in 2025. The material growth in deal values, up 37%, outpaced the 12% rise in deal count, largely fueled by a sharp increase in mega deals. Seventy transactions exceeded $10 billion, an 81% jump, alongside 617 deals surpassing $1 billion. This surge in high-value transactions naturally increased demand for robust risk transfer mechanisms, pushing the limits of available capacity and, consequently, pricing.
Market Reversal and Its Drivers
The claims environment has been a critical factor in this market correction. Global transactional risk insurance claims frequency and severity both rose in 2025. The UK, for instance, reached historic notification and payout levels, while Europe's claims doubled, and Asia experienced sharp increases. Although North America's notifications dipped slightly, total loss payments in the region hit a record high. This sustained claims pressure has prompted insurers to reassess their risk appetite and adjust pricing to reflect the increased exposure inherent in both higher deal activity and elevated claim severity.
The rising claims activity reflects a more complex M&A environment, characterized by increased scrutiny of deal structures and warranties. Geopolitical uncertainty and intensifying regulatory pressures mean buyers are more frequently uncovering breaches during post-completion integration. Sellers, on the other hand, face greater exposure from earn-out disputes and indemnity triggers. The market always finds its equilibrium, often with a jolt.
The market always finds its equilibrium, often with a jolt.
Simultaneously, the tax insurance segment has seen accelerated growth. Marsh Risk reported an 82% increase in tax insurance policies placed in North America in 2025, with Europe seeing over 50% growth in policy count and insured limits more than doubling. This surge is a clear indicator of growing complexity in cross-border transactions, heightened regulatory scrutiny, and a greater awareness among buyers of the protection available for tax-related risks. Tax insurance has become an indispensable tool in complex restructurings and private equity exits, where legacy tax positions can introduce significant deal uncertainty, enabling deal completion even when absolute tax certainty is elusive.
Corporate Acquirers Lead
A significant structural shift is evident in buyer behavior. For the third consecutive year, corporate and strategic insureds accounted for a greater share (53%) of transactional risk insurance programs placed by Marsh Risk than private equity firms (47%). This indicates a sustained evolution beyond the traditional private equity stronghold. Strategic acquirers are increasingly recognizing the value of transferring deal-related risks to the insurance market, deploying R&W insurance routinely to gain competitive advantage in auction processes, limit balance sheet exposure, and facilitate clean exits for sellers. This broader adoption signifies a maturation of the transactional risk market, moving from a niche tool to a standard component of M&A strategy across diverse buyer types.
While North America and Asia experienced substantial rate increases, pricing movements were not uniform. Europe saw more modest adjustments, reflecting regional differences in claims experience and competitive dynamics among insurers. This geographic divergence underscores that despite the globalization of transactional risk insurance capacity, local market conditions, regulatory environments, and claims histories continue to exert a significant influence on pricing.
The outlook for 2026 suggests a continuation of this firming trend. Deal activity remains robust, and demand for transactional risk solutions is high. Insurers, having reassessed their risk appetite following several years of competitive pricing, are tightening underwriting standards. This involves more detailed due diligence on target companies and stricter exclusions for known risks. Retention levels have also crept higher for certain sectors and deal types where claim experience has been adverse. Buyers should now factor in higher insurance costs when structuring deals, understanding that while the cost has increased, transactional risk insurance remains an invaluable tool for navigating complex transactions in an uncertain economic environment.
The era of cheap transactional risk is over.
What was once a competitive advantage for buyers now becomes a necessary cost of doing business.
