Tax and Contingent

4. Tax and Contingent

Tax liability and contingent risk insurance are becoming essential tools for managing complex and evolving risks in M&A transactions. As tax regulations shift globally and new risk areas emerge, understanding these insurance markets is crucial for buyers, sellers, and advisors aiming to safeguard deals and navigate uncertainty. This section highlights the latest market dynamics, emerging trends, and what to expect in the rest of 2025

Tax liability insurance: Market growth and future outlook

Strong growth in 2025: Tax risk insurance continues to expand in 2025, following record underwriting volumes and higher limits last year. Standalone solutions are increasingly recognised across company, trust and high net worth contexts.

Standalone appeal: Tax insurance is now widely recognized beyond R&W carve-outs as a standalone product for companies, trusts, and high net worth individuals to manage tax planning and controversy risks.

Regional expertise deepening: France and Italy bolstered underwriting capabilities by hiring seasoned tax lawyers; Central and Eastern Europe showed increased flexibility in coverage and pricing.

North American surge: Historic tax insurance submissions are fuelled by greater awareness and the ongoing impact of the Inflation Reduction Act.

Emerging themes: Intergenerational wealth transfer risks are gaining attention, especially in Southern Europe.

2026 outlook: While regional expertise has deepened in Europe and North America. Looking ahead, volatility in US tax policy and ongoing regulatory change in Europe are expected to keep demand high.

Strong market interest: Demand remains high globally as clients seek innovative solutions for evolving contingent risks.

Shift to portfolio solutions: U.S. clients increasingly seek broad contingent risk coverage, leveraging insurer relationships for comprehensive risk management.

Specialist underwriters: Insurers are hiring experts in litigation and IP to enhance their contingent risk offerings and differentiate in a crowded market.

Deal structuring tool: buyers are increasingly considering insuring contingent risks in order to make their bids more attractive.

Growing international focus: Central and Eastern Europe sees rising insurer interest in ESG risks and sector-specific coverage, including AI-related IP concerns.

Contingent risk insurance: Expanding scope and sophistication

In summary, the tax liability and contingent risk insurance markets are evolving rapidly, driven by regulatory complexity, innovation in coverage, and shifting deal dynamics. Insurers are continuously innovating to seek to provide the most comprehensive cover possible in a bid to reflect the ever evolving M&A landscape. Staying ahead of these trends will be vital for those seeking to effectively manage risk and capitalise on emerging insurance opportunities in M&A.