Demand for transactional risk insurance surged in 2014,surpassing previous records, according to a new report fromMarsh.

In its Annual Transactional Risk Report 2014, the globalinsurance and risk management leader says that policies grew 36% in2014 to 341 and limits purchased increased 51% to $7.7 million.Much of that demand is attributable to warranty and indemnity,representations and warranties, and tax and contingent liabilityinsurance.

Most of these policies were placed in the U.S., where dealsinvolving mid-size companies and wider use among law and privateequity firms drove demand. Eighty of Marsh's 90 new transactionalrisk policies occurred stateside, an increase of 108%. Coverageexpansions that include exclusions for consequential, special andmultiplied damages, as well as damages based on diminution invalue, raised premiums.

Emerging markets continue to embrace transactional riskinsurance, and Marsh brokered the first locally issued policies inMalaysia, Mexico, the Philippines and Saudi Arabia in 2014.Although the number of policies placed in Europe, the Middle Eastand Africa grew far less (18%) when compared to the U.S., thelimits of insurance placed grew 42% to $3.9 million and representsjust more than half of the global total. Growth was spread among awide range of industries, including energy, healthcare,infrastructure, IT, real estate, food and retail.

With 61% of total policies placed, private equity and otherfinancial sponsors are the firms most likely to purchasetransactional risk coverage, perhaps “driven by a desire to executeliability-free exits,” Marsh posits. However, this is not a globaltrend: In the Asia-Pacific region, acquisitive corporations are themost active users.

“2014 was a landmark year for the use of this insurancesolution. Record demand in mature M&A markets, which istestament to the efficacy of transactional risk insurance, combinedwith continued increasing usage in emerging markets, helped drivethese historic results,” Karen Beldy Torborg, global leader ofMarsh's Private Equity and M&A Services Practice, said in astatement. “We expect to see similar demand for transactional riskinsurance in 2015.”