This article presents an overview of key developments and trends in the M&A insurance market during the first quarter of 2025.
This article includes insights compiled by Howden M&A, with a focus on notable events, including the U.S. government's announcement on April 2nd of additional tariffs that may affect global M&A activity.
As of the end of Q1, Howden M&A has observed minimal disruption to deal flow and limited instances of transactions being paused or cancelled. The situation will be monitored closely, and further updates will be provided in future publications.
1. Warranty & Indemnity (W&I) insurance
Strong deal flow in secondaries: Howden maintained its market dominance in secondaries transactions in Q1. We are currently working on 25 live transactions in this industry.
Expanding jurisdictional appetite: More insurers are looking to compete in what were once perceived to be higher risk sectors and jurisdictions. We recently secured quotes for a Bangladeshi confectionery manufacturer and financial services targets in Bahrain, Greece, and Cyprus.
US inbound transactions: Warranty and indemnity underwriters are increasingly accommodating US-style reps and warranties cover positions within UK/EU law transaction documents for additional premium. This coverage works well on transactions with US parties involved, but can also be helpful in scenarios where the insured is more risk averse and wishes to benefit from enhanced coverage.
2. Tax & Contingent Risks
Belgium and Luxembourg: The demand for tax insurance in Belgium and Luxembourg continues to rise. As far as Belgium is concerned, the main risks insured remain (partial) demergers and withholding tax related. However, possibly due to the possible introduction of a new tax regime on capital gains on shares (“solidariteitsbijdrage/contribution de solidarité”) an increase for risks relating to the taxation of capital gains for private individuals is on the rise as many investors seek to exit under the current regime. In Luxembourg, insured risks often relate to tax losses carried forward and debt waivers.
Netherlands: Demand for tax insurance in this region has remained strong in Q1 2025. Tax risks for which insurance is sought, include WHT within and outside of M&A transactions, VAT and RETT on real estate transactions (e.g., applicability of the TOGC and concurrence exemption regime), CIT and RETT risks relating to internal reorganizations (e.g., exemptions pertaining to mergers and demergers), as well as transfer pricing.
Finally, we’ve seen an increase in demand for known legal risks (Contingent risks), both within as well as outside of M&A transactions in the Benelux.
3. Title & Environmental Risks
Our Environmental Risks team has strengthened the available coverage for emerging contaminants such as Per- and Polyfluoroalkyl Substances (PFAS), as the environmental insurance market continues to be highly competitive. As the regulatory environment develops, we have seen an increasing number of enquiries on deals in industries not traditionally considered "high-risk" for legacy contamination (including hospitality and commercial), but which nonetheless may have potentially significant financial liabilities associated with PFAS.
When identified or suspected, our team has observed PFAS contamination in particular is now a contentious issue in negotiations, due to recently updated UK and European regulations and the possibility of cost-intensive remediation. In the UK, our team recently placed a policy for a hospitality asset located on a landfill, (a potential PFAS source), protecting the buyer in the event of claims in the context of growing regulatory scrutiny. Furthermore, our team was able to secure cover for identified PFAS contamination at a warehouse adjacent to a military airfield in Europe. By addressing potential financial liability associated with the known contamination, the policy solution both protected the buyer and allowed a clean exit for the seller.
Looking forward, we anticipate continued discussion of PFAS on deals, as well as newer emerging contaminants such as 1,4-dioxane (a solvent stabiliser used in detergents and personal care products), and microplastics. As the environmental policy responds to changes in law and clean-up standards, it can provide cost effective protection for buyers even in the event of regulatory change. Please reach out to Daniela Bergs for further information on the product or to discuss specific risks.
4. Transactional Diligence
Insurance due diligence: The team saw deal volume reduce for M&A activity at the beginning of the year. This began to change from March 2025, with an increase in volume seen in carve outs and more distressed acquisitions.
Lenders’ Insurance Advisory: Our team has reported a steady increase in deals from the beginning of 2025. The key regions for these were Europe and Africa. We are also starting to see projects from more uncommon jurisdictions such as Mongolia.
Asides from project finance and real estate, Lenders' Insurance Advisory are focusing on private credit lenders to assist them with insurance DD for other types of financing e.g. distressed debt, special situations etc.
Both teams are seeing a steady flow of deals in the renewable energy sector, particularly with solar PV and battery storage projects.
5. Claims
In claims, we have seen notifications increase by 52% in Q1 2025, compared to Q1 2024. The majority of these relate to deals in Benelux, Iberia and the UK. Financial statements and tax breaches continue to be the most commonly notified breaches, at 21% and 24% respectively, followed by material contracts (19%) and compliance with laws (14%).
Howden M&A’s clients have already secured approx. EUR 40m+ of insurance cover this quarter. These claims mostly relate to financial statement breaches in the UK and Nordics.
Please reach out to our M&A experts below if you would like to discuss these insurance market dynamics in further detail.
Gauthier Drion, Head of Benelux
