Record demand for transaction risk insurance

2017 and Q1 through Q3 of 2018 have demonstrated, yet again, dynamic growth of the market for M&A transaction insurance in Poland, attesting to this market’s coming of age – most of the tendencies observed at the Europe-wide level are reflected in Polish transactions.

The increase in the number of local projects on which we worked in 2017 (as of 2016) achieved 50%, and we expect even more growth for 2018.

Transaction insurers are becoming more flexible as regards the scope of insurance, even though damage claims have been increasing – as at late 2017, for every 5 insurance policies arranged by Marsh 1 damage claim was filed, up from 1 out of 7 a year earlier. Yet insurance premiums have been dropping, which shows that damage claims have not significantly influenced insurance prices.

The market, albeit still a niche one, has been briskly growing and now includes over 25 insurers in the EMEA region. The growing competition has been all good news as regards prices, and the increasing popularity of transaction insurance is also driven by growth of the Polish M&A market.

“For many years, the M&A market in Poland has been in an upward tendency. Of the factors fuelling this growth, we should mention, among others, lack of succession in family businesses launched in the early 1990s. Entities of this sort tend to be less well prepared for the sale process, and then insurance can do much to facilitate putting together a transaction. Apart from private owners, the selling side will increasingly often be a private equity fund; from their point of view, insurance will be attractive for example in a situation where the fund’s investment horizon precludes acceptance of the purchaser’s potential claims under guarantees and warranties beyond a short term immediately subsequent to the closing”, explains Piotr Grauer, director in the deal advisory team of KPMG Poland (…)

Full text is available in Puls Biznesu.