Foreword

Transactional risk insurance is now central to global M&A. Deal flow has strengthened through 2025, with buyers and sellers increasingly relying on insurance to close valuation gaps and protect investments. Pricing remains historically low but claims experience and underwriting quality are becoming the real differentiators.

Capacity is still abundant, with new entrants adding competition, but signs suggest the softest phase of the market is behind us. Insurers are tightening appetite in some sectors, refining claims processes, and testing new product features such as synthetic cover and US-style enhancements.

What this means for clients in 2025:

Claims matter more than price. The most competitive policies will be judged by how they respond in practice, not just cost.
Specialist covers are mainstream. Tax liability, contingent risk and synthetic warranties are no longer niche; they are core tools for risk management.
Insurer caution is rising. The market is still client-friendly, but the balance is shifting.

Top three actions for deal teams:

Test insurer claims records and underwriting efficiency not just premium levels.
Explore synthetic and contingent solutions early to bridge deal gaps.
Involve your broker at the start of diligence to shape scope, manage insurer expectations, and avoid last-minute surprises.

Market Outlook and Trends – 2025

Global M&A activity has held steady in 2025, with volumes and deal sizes continuing the upward trend established last year. Large transactions remain a defining feature: over 100 deals above $1bn have already closed this year, alongside a healthy flow of mid-market activity.

Key forces that have shaped the 2025 market:

Political volatility. Government policy shifts in the US, EU and beyond are affecting valuations, leverage availability and deal certainty.
Economic recalibration. While interest rates are easing, capital market volatility persists, driving caution into negotiations and insurance placement.
Competitive insurance landscape. New entrants and incumbents alike are maintaining abundant capacity, but rate pressure is stabilising. The cheapest cover may no longer be the best.
Sectoral shifts. Appetite is broadening in life sciences, financial services and IP-heavy sectors, supported by underwriters’ investment in in-house expertise and analytics.
Regulatory drivers. ESG scrutiny, AI-related IP risks, and region-specific compliance trends are emerging as decisive factors for insurer appetite.

The outlook for H2 2025 and beyond:

Marginal upward pressure on premiums is likely as insurers push back against unsustainable lows.
Demand for tax and contingent insurance will remain high, driven by regulatory complexity and corporate restructurings.
Synthetic warranty cover will continue to grow, enabling complex transactions where sellers cannot or will not provide warranties.
Claims differentiation will intensify: the speed, fairness and efficiency of response will set leading insurers apart.

For deal teams, this means insurance remains a powerful enabler but a more discerning approach to insurer selection, product structuring and claims advocacy is essential in 2025 and beyond.