JLT Specialty says there was a 76% increase in the number of merger and acquisition (M&A) insurance policies placed worldwide in the first half, amid increased competition.

“The growth in use of M&A insurance has been fuelled by a number of factors ranging from falling premium rates to a reduction in retention rates,” JLT Specialty Mergers & Acquisitions Partner Ben Crabtree said.

The cover, also known as warranty and indemnity insurance, is designed to protect buyers against breaches discovered after completion of a deal.

JLT Specialty’s Global M&A Insurance Index shows average premiums rates fell 12% from last year and 25% from two years ago.

New market entrants competing for smaller deals and wider market growth led to a 44% decline in average policy retention rates.

“The level of cover sought is directly linked to the size of the deal, with smaller transactions often using insurance up to the full deal value,” JLT says.

The real estate sector is one of the main users of M&A insurance, representing 27% of total deals bound by JLT outside the US. The retail, consumer, and technology and communications sectors are increasingly frequent users.

JLT says the number of requests for standalone tax liability insurance is increasing, underlining a desire to ring-fence tax issue risks when completing a deal.