2026 MARKET TRENDS

Private Equity & Transactional Risk

Key Takeaways

Add-on acquisitions increased in 2025, contributing to lower average representations and warranties (R&W) insurance limits, while late-year deal activity signaled momentum heading into 2026 despite continued credit market constraints
The transactional insurance market remained bifurcated, with established carriers pushing for higher rates amid loss activity while newer entrants maintained lower premiums; coverage breadth expanded and overall capacity returned to pre-2023 levels
Early broker engagement and thoughtful use of transactional risk products remain critical, as deal flow, pricing and coverage availability continue to be shaped by economic and credit conditions

While many carriers limited primary layers to $25 million following 2022, several are now willing to deploy larger limits, restoring flexibility for larger transactions.

Overview

The private equity landscape continues to shift as acquisition strategies adjust to broader economic conditions. In 2025, add-on acquisitions represented a larger share of total deal activity compared to platform transactions. Because add-ons typically involve smaller enterprise values, this trend resulted in lower average limits purchased for R&W insurance.

Deal flow was uneven throughout the year, with periods of increased activity followed by slowdowns. Activity accelerated late in the year, suggesting potential momentum entering 2026. At the same time, deal execution proved challenging. More transactions failed late in the process, often due to tightening credit conditions or weakening financial performance at target companies, including declining revenues.

Market Conditions

The transactional insurance market began in 2025 in a relatively soft position, but pricing approaches diverged as the year progressed. Established carriers increasingly sought higher premiums and retentions in response to claims experience. Newer market entrants continued to offer lower pricing in order to gain market share. As a result, pricing outcomes varied significantly depending on carrier selection.

Coverage remains broad, with carriers offering optional enhancements for additional premium. These include tax gross-up provisions, extended survival periods of up to six years for all representations and nil retention options for true fundamental representations. Market capacity has also expanded. While many carriers limited primary layers to $25 million following 2022, several are now willing to deploy larger limits, restoring flexibility for larger transactions.

Broader economic factors including interest rates, tariffs, tax policy changes and credit availability continue to influence buyer behavior and underwriting appetite.

Impacts & Considerations

Although transactional liability policies are one-time placements, buyers can take steps to help improve outcomes in the current market environment:

Start early

Engage your broker early in the acquisition process to understand coverage options, underwriting expectations and timing considerations

Competitive positioning

Transactional risk products continue to support competitive bid strategies by limiting seller post-close exposure and allowing buyers to secure broader indemnification protection

Monitor deal flow

Changes in interest rates and tax policy may increase deal activity and place upward pressure on pricing, while slower deal volume could increase competition among carriers

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