Marsh reports 30% increase in transactional risk claims in 2023

Marsh, the insurance broker and risk advisor subsidiary of Marsh McLennan, has reported that despite the slowest annual period for US dealmaking in six years, its North America team successfully placed 1,046 transactional risk policies.

The broker’s clients in North America reported 240 transactional risk claims in 2023, representing a 30% increase in new claims compared to 2022.

These include primary and excess on 555 unique transactions in 2023, a 4% increase over 2022. Marsh’s “Transactional Risk Insurance 2023: Year in Review” report provides an overview of the transactional risk insurance market across all geographic regions and explores expected developments in 2024.

Other key findings for North America show that rates for R&W insurance decreased steadily throughout 2023 starting in February 2022. By December 2023, primary layer R&W insurance rates were more than 50% lower than the peak rates in early 2022, and the lowest in over a decade.

The broker stated that softening rates were impacted by continued expansion in supply and weaker demand. Most R&W insurance policies in 2023 were cheaper but also provided better coverage for insureds than at any time in the product’s history in North America.

There was an all-time high demand for tax insurance in the renewable energy sector in 2023 fueled by coverage for investment tax credit projects which were predominantly solar energy investments. Marsh’s North America tax insurance brokers sent over 100 tax insurance submissions into the marketplace in 2023.

In 2023, R&W insurers paid more than $200 million to Marsh clients, representing over $270 million in recognised losses. The majority of payments which is 63%, resulted from claims asserting financial statements or compliance with law breaches.

Craig Schioppo, Global Head of Transactional Risk, Marsh Specialty, concluded, “In 2023, the global transactional risk insurance remained resilient despite a decline in global M&A activity, with Marsh experiencing its third busiest year on record.

“Based on increased transactional risk insurance submissions in the fourth quarter of 2023 and current activity to-date, it is likely that 2024 will see an increase in M&A activity globally. Transactional risk insurance will remain crucial, with insurers expanding their underwriting appetite to meet client demand.”

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