US and Canada transaction risk insurance methods for Marsh completed 584 insurance placements on mergers and acquisitions in 2020, an increase of 11% from 2019, according to a report from the broker on Thursday.
This included the record 1,041 primary and surplus policies for transaction risks by 2020, an increase of 22% over 2019, largely representations and guarantee coverage, commonly known as "reps and guarantees." This was also the first year in which more than 1,000 transaction risk policies were placed during a calendar year.
Transaction risk policies also received premiums to recover in 2020, the first year with primary interest rates exceeding 3% since 201
Primary R & D insurance rates increased across the Marsh portfolio by 9.7%, to 3.04% interest on-line, calculated by dividing the premium by insurance limits.
However, the increases in activity policy volume are accompanied by increased mussels, which in turn will drive further interest rate hikes.
"Increases in the frequency and severity of R&D claims are expected to continue in 2021 and beyond as transaction volumes continue to grow," Craig Schioppo, Marsh's Head of Transaction Risks in the United States and Canada, said in a statement with the report. "Against this background, we expect interest rate hikes to continue in the short to medium term."