Demystifying Transactional Risk Insurance in Africa

In this deep-dive episode, Tony is joined by Luke Sutton, Head of Transactional Risk Insurance at Marsh, to discuss the rise of transactional risk insurance and its transformative effect on the M&A landscape, especially in Africa. Luke breaks down the core components of transactional risk insurance, including warranty and indemnity cover, tax liability insurance, and contingent risk solutions. He emphasizes that while this insurance was once reserved for large, private equity-backed transactions, it has evolved into a flexible, accessible product that can support deals of all sizes.

The conversation sheds light on the increasing sophistication of dealmaking in Africa. As international investors enter the market and local players mature, there's greater appetite for tools that reduce friction, create certainty, and backstop risk. Luke shares findings from Marsh’s latest Transactional Risk Insurance Report, including an 8% global increase in deal activity, significant growth in the use of insurance, even in a modest M&A year, and trends around sectoral activity in Africa, such as energy, technology, and consumer growth.

He also explores how early engagement with a broker like Marsh can help sellers present cleaner exits and buyers ensure peace of mind, especially with rising claims severity and complexity. With Marsh’s global vantage point and local expertise, clients gain access to strategic insights, insurer relationships, and risk mitigation strategies that are reshaping how deals are done across the continent.

Key Points

• Transactional risk insurance is a flexible risk-transfer tool that helps buyers and sellers manage contractual liabilities in M&A deals.

• While once exclusive to large, private equity-backed deals, it's now accessible to mid-market and SME transactions, especially in Africa.

• The three core products under this umbrella are: Warranty & Indemnity Insurance, Tax Liability Insurance, Contingent Risk Insurance

• African markets are maturing rapidly, with insurers showing increased interest in covering deals on the continent.

• Premium rates are decreasing, and more insurers are competing for African deal opportunities.

• There's been a rise in corporate usage, not just private equity, of transactional risk products.

• Early engagement with brokers adds value through deal preparation, not just placement.

• Marsh’s report also tracks claims frequency and severity, indicating real-world value for these products.