In an interview with Reinsurance News, Liria Martinez-Salmon, Managing Director and Head of Southern Europe at Devonshire Underwriting, said claims notifications in Southern Europe’s transactional risk insurance market have risen by more than 100%.
We recently spoke with Martinez-Salmon about current transactional risk market conditions, and the significant increase in claims notifications was highlighted.
“We have seen notifications rise by more than 100% year-on-year. While the impact of this has not yet fully filtered through to the market due to broader macroeconomic conditions and lower deal volumes, I expect it will become more visible in the short to medium term,” she said.
Martinez-Salmon underlined increased competition within the market, noting that pricing and coverage terms have continued to evolve. “The market is becoming increasingly crowded, creating highly competitive conditions. Prices have never been lower in southern European jurisdictions and cover has never been broader, posing the question of the sustainability of the products if this trend continues.”
Looking at individual jurisdictions, she said Spain remains the most mature transactional risk market in the region, “with products and processes now well established,” while Italy, France and Portugal are following behind, albeit at different stages of maturity.
In fact, according to Martinez-Salmon, Spain has reached penetration levels similar to those seen in Nordic markets, where most insurable transactions are already insured.
“As a result, growth in W&I is increasingly about market share, whereas tax and contingent risk products still offer substantial room for expansion. We also see considerable growth potential in tax and contingent risk solutions across all jurisdictions, with considerable room to be filled in Italy and France in particular,” she explained.
On key market growth opportunities, Martinez-Salmon told Reinsurance News that clients continue to seek underwriting expertise and transaction-specific solutions. “The biggest opportunity lies in adding value for clients through specialist expertise and high-quality underwriting.”
“As market conditions become more challenging, clients increasingly need experienced underwriters who can help structure solutions rather than simply provide capacity,” she added.
Martinez-Salmon also emphasised that the current economic environment is creating opportunities in more complex transactions. “These are areas where Devonshire can add significant value in light of years of experience dealing with complex market-leading transactions. Given the economic uncertainty expected over the coming months and years, demand for specialist and tailored solutions is likely to continue increasing.”
Alongside the opportunities, Martinez-Salmon explained that current macroeconomic conditions are also influencing M&A activity and the adoption of transactional risk solutions, with Devonshire seeing fewer deals overall, while those that do come to market are generally smaller in value.
“Transactions are also taking significantly longer to complete, with negotiations often taking up to five times longer than they did previously.
“There are still plenty of opportunities in the market, but competition for deals is intense and the path to completion is paved with more uncertainties.
“In Spain specifically, political developments and potential upcoming elections may also influence market sentiment and economic activity. We may see greater clarity and potentially increased confidence once the outcome is known,” she said.
Within the transactional risk insurance sector, like other insurance markets, buyer and seller dynamics differ from region to region, and when it comes to differences between Southern Europe, the UK and Northern Europe, Martinez-Salmon noted that “the underlying risk allocation dynamics are actually very similar.”
“The main difference is in market maturity and familiarity with transactional risk insurance. In the UK and Northern Europe, transactional risk products are highly established and widely understood, so there is little need for education around their use. In Southern Europe, despite recent years’ growth, there is still some need to explain the benefits and mechanics of the products,” she continued.
The conversation then shifted to demand for transactional risk insurance in Southern Europe over the next 12-24 months, and Martinez-Salmon highlighted continued demand in France, and a positive outlook in other countries.
“France has historically been a challenging market, and adoption has taken time, but penetration is increasing steadily.
“In Spain and Italy, transactional risk insurance is already well established among key market participants. As a result, I do not expect demand to decline. Instead, growth is likely to track broader M&A activity over the coming years.
“Portugal remains a unique case due to the size of the market. Deal values are typically much lower than in other regions.
“One of the key factors to watch over the next couple of years will be how capacity providers respond to the increase in claims activity. It will be interesting to see whether insurers reduce capacity, tighten terms or otherwise adjust their appetite,” she said.
To end, Martinez-Salmon explained how Devonshire Underwriting positions itself to respond to these trends and support clients in the region.
“When economic conditions are strong, claims expectations tend to be lower. In more uncertain environments, however, transaction structures become increasingly complex and require greater expertise to navigate effectively.
“That is where Devonshire is particularly well positioned. Complex transactions require specialist underwriting knowledge and a deep understanding of local markets. While some MGAs are focused on achieving higher volumes in a limited number of jurisdictions, Devonshire combines technical expertise with broad market coverage across Southern Europe, enabling us to support clients on a wide range of challenging and sophisticated transactions,” she said.
