The use of transactional risk insurance for mergers and acquisitions (M&A) continued to increase globally during 2015, according to a report published by Marsh.
Transactional risk insurance provides protection to company deals such as M&A activities. Products include representations and warranties (R&W), warranty and indemnity (W&I), tax indemnity and contingent liability insurance.
Marsh placed 450 transactional risk policies in 2015, a 32% increase from the previous year.
The insurance broking and risk management firm said the growth was due to investors recognising the importance of reducing deal risk.
Karen Beldy Torborg, global leader for Marsh's private equity and M&A services practice, said: "Global dealmakers across all sectors recognise the important role this solution can play in limiting risk and improving deal terms."
Asia-Pacific in particular accounted for the largest year-over-year increase. The company saw a 141% spike in business volumes, with 94 policies placed in the region.
The US and Canada had the largest number of policies placed (186), a 21% jump from the previous year.
The take-up of transactional risk policies in Europe, the Middle East and Africa also saw an increase of 15%, with 170 polices placed.
Originally used almost exclusively by private equity firms, the report found a "dramatic uplift" of corporate buyers using transactional risk insurance, especially in auction situations.
Policies from private equity reduced to 56% from 61%, while corporate buyers accounted for 44% of the policies, up from 39% in 2014. Marsh expected the trend to continue.
The document also revealed the number of insurers that offer the product had increased dramatically, with 25 companies offering coverage globally, a 30% increase in the past year alone.
