After a volatile start to 2025, M&A activity across Asia Pacific regained momentum in the second half of the year. The Gallagher Global M&A Insurance 2025 Review and 2026 Outlook report shows overall deal volumes across the region increased by 5% year on year, driven largely by activity in India, South Korea and Japan. While Australian dealmaking remained relatively steady, important shifts in deal structure, regulation and insurance markets are changing how transactions are executed locally.
Cross border activity and regulatory change reshape deal risk
Cross border transactions continue to play a growing role in Australia, now accounting for 61% of announced deal value, up from 49% previously. This reflects continued inbound interest in Australian assets across sectors such as infrastructure, professional services and technology.
At the same time, Australia has introduced regulatory reform that affects transaction planning and execution. From 1 January 2026, a new mandatory merger control regime applies. While the full impact is still emerging, these changes are expected to increase execution risk and frictional costs for notifiable transactions, due to potential longer approval timelines. As a result, deal certainty and risk allocation are increasingly front of mind for both buyers and sellers.
W&I insurance pricing remains highly favourable
Market conditions for warranty and indemnity (W&I) insurance remained exceptionally strong in 2025. Premium rates across Asia Pacific declined for a fourth consecutive year, with Australia and New Zealand reaching a historical low premium rate of 0.88%, down from 1.09% in 2024.
Lower negotiated pricing, combined with insurer competition and strong capacity, has made W&I insurance more accessible across a broader range of transactions. While some unprofitable MGAs have exited the market, overall capacity remains ample and coverage terms continue to be competitive, supporting greater flexibility in structuring deals. Gallagher estimates that capacity of over AUD 1 billion is achievable on a per transaction basis in Asia Pacific.
Lower retentions, higher insured limits and strong capacity
Alongside pricing being brokered lower, claim thresholds continued to be negotiated lower. In Australia and New Zealand, average retentions for non fundamental warranties reduced to 0.51% of transaction value in 2025, contributing to broader uptake of W&I insurance in mid market deals. Insured limits also increased as a proportion of deal value, supported by lower premiums and competitive capacity.
Buy side cover and sell buy flip structures dominate
Within Gallagher's Australian and New Zealand placements, buy side W&I policies accounted for 93% of all policies placed in 2025. More than half of these resulted from seller initiated sell buy flip (SBF) processes, reflecting the growing preference for clean exits supported by insurance as the primary recourse for warranty claims.
SBF structures are a standard feature of competitive sale processes, with sellers increasingly selecting insurers and initiating underwriting upfront as a staple to the transaction. This allows bidders to rely on a pre negotiated draft policy, reducing underwriting timelines and supporting deal certainty in auctions.
Looking ahead
Looking ahead, Gallagher remains cautiously optimistic for 2026. Significant dry powder held by financial sponsors, continued corporate carve-outs and ongoing product innovation are expected to support deal activity. In an environment shaped by regulatory change and execution risk, transactional insurance will continue to play a central role in supporting deal certainty and successful outcomes.
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