Future-proofing transactional risk: How reinsurers are shaping the 2026 M&A landscape

As we enter 2026, transactional-risk insurance continues to mature into a core pillar of the M&A landscape.

What began as a niche solution for deal certainty has become a mainstream tool for buyers, sellers, and advisers across the UK, Europe, North America and beyond.

For reinsurers, the evolution of warranty & indemnity (W&I), tax and contingent risk coverage presents both opportunity and complexity, particularly as appetite, pricing and risk assessment evolve in a more data-rich environment.

Global and UK M&A: What It means for W&I demand

After a subdued period in 2023–24, M&A momentum returned in 2025, with global deal values rebounding around 10% year-on-year, according to BCG.

Europe has played a pivotal role in that recovery, and the UK remains one of the top three global deal hubs by volume, with particularly strong mid-market activity in energy, technology and financial services.

The W&I market has mirrored this trajectory.

UK and European insurers reported double-digit growth in submissions through 2025, with deal teams increasingly viewing W&I as standard practice rather than an optional bolt-on.

In a market that prizes clean exits, compressed timetables and cross-border complexity, transactional insurance is simply a necessity.

For reinsurers, this resurgence means more capacity deployment and diversification.

The London market, in particular, continues to serve as a global centre for deal-risk expertise.

Lloyd’s syndicates and specialist MGAs providing the conduit between international capital and local underwriting insight.

Recalibrating in a data-rich environment

Reinsurers are entering 2026 with greater confidence but also sharper scrutiny.

Global dedicated reinsurance capital stood at roughly US $650 billion at the end of 2025, according to Guy Carpenter, providing strong capacity for specialty lines such as transactional risk.

Yet general reinsurance pricing conditions are gradually softening following several years of hardening.

In the deal-risk segment, data is transforming the underwriting process.

Access to richer due-diligence data, improved claims analytics and sector benchmarking is enabling more precise pricing and portfolio management.

UK and European reinsurers, known for technical underwriting discipline, are integrating these tools to refine their appetite. Rather than retreating from complex risks, many are recalibrating attachment points, co-participation structures and sector limits based on data-driven insights.

This is particularly visible in the London market, where reinsurance partners are now actively engaging with underwriters on real-time exposure modelling, claims triage and trend analysis.

The result is a more transparent, analytical dialogue between primary insurers and capacity providers.

Expanding ESG, tax and contingent risks

The scope of transactional-risk cover is widening well beyond W&I. ESG considerations, tax exposures and contingent liabilities are reshaping demand, especially in the UK and Europe, where regulatory and investor scrutiny continues to intensify.

Tax indemnity policies remain one of the fastest-growing areas, driven by uncertainty around tax authority behaviour, global tax standards and cross-border restructurings.

Meanwhile, ESG-linked warranties are gaining traction, particularly in deals involving infrastructure and renewables.

From a reinsurance perspective, these emerging coverages provide diversification along with complexity.

The lack of long-term claims data makes pricing inherently challenging, while the potential for systemic aggregation across multiple platforms demands portfolio-level oversight.

For that reason, many European reinsurers are approaching these exposures cautiously but creatively, offering layered, quota-share or hybrid structures that balance innovation with prudence.

Outlook for 2026: Innovation, pressure and the next wave

As the transactional-risk market enters its next phase, several pressure points and innovation trends are likely to shape 2026 and beyond:

Sectoral concentration: Technology, renewables and financial services are driving UK and EU deal activity. Reinsurers will need to monitor accumulation risk across these correlated sectors.

Data-enabled underwriting: The use of AI and deal analytics will deepen, with reinsurers favoring partners that demonstrate measurable data capability in their underwriting submissions which will assist reinsurers in managing aggregation risks.

Regulatory evolution: EU and UK regulators are expected to sharpen disclosure requirements on ESG and financial crime diligence, influencing both policy wording and pricing models.

Pricing discipline: With broader reinsurance market softening forecast through 2026, according to Fitch Ratings, transactional-risk underwriters and capacity providers will need to resist margin erosion while staying competitive.

For me, 2026 is the year the spotlight shifts behind the scenes. Reinsurers have always been the quiet enablers of deal certainty, but in this market, their role is becoming decisive. The frameworks they build - around capital, data, and ESG - will determine how far and how fast the transactional-risk market can evolve.

Looking ahead, I firmly believe that those who treat reinsurance as a partnership, not a product, will lead the next chapter of M&A protection. The most resilient markets aren’t just insured - they’re reinsured with foresight.

By Charles Turnham, partner, Devonshire Underwriting