State of the Insurance Market Report

2024 Initial Outlook:
Private Equity Insurance

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Market Updates

Private equity (PE) deals and exit activity dropped by around 30% in 2023. Uncertainty around rising interest rates prompted firms to be cautious, temporarily pausing larger deals in favor of smaller ones. Larger deal activity might pick up once the interest rate environment stabilizes.

Analyzing the Market In a dimly lit home officeContinuation funds

Continuation fund transactions were more prominent in the first half of 2023. Underwriters usually rely on comprehensive diligence reports and calls to assess transactions. However, in continuation fund transactions, new limited partners (LPs) rely on historical performance and the reputation of the PE sponsor. Representations and warranties insurance (RWI) is becoming a standard feature in continuation fund transactions, with PE sponsors leveraging RWI to mitigate risk.

While continuation funds offer flexibility to LPs, the complex nature and short notice of these transactions raise concerns about potential litigation from LPs. Underwriters are particularly worried about the inherent conflict of interest when the same PE sponsor acts as both the "seller" (existing fund) and "buyer" (continuation fund).

The insurance industry is working to catch up with these developments. Underwriters are assessing continuation fund transactions with heightened scrutiny due to the increased risk exposure.

Coverage Considerations

PE is in a soft market. Insurance carriers are eager to write business in the private equity space. Increased capacity has led to a competitive environment where carriers are more willing to offer improved coverage terms to attract PE clients. PE organizations expect comprehensive coverage at reduced prices. Firms need coverage that meets their specific needs surrounding:

  • Professional liability
  • Directors and Officers liability
  • Cybersecurity
  • Fiduciary liability
  • Employment practice liability
  • Transactional risks
  • Regulatory and compliance
  • Property and business interruption
Rate Forecast
Private Equity - D&O Private: -10% to flat
Private Equity - D&O Public: -10% to flat
Private Equity - Reps and Warranties: -10% to -15%

RWI premium pricing decreased in the past year due to the slowdown in M&A activity, an increase in market capacity and carriers’ expanding their appetite for risks such as healthcare, smaller transactions and financial institutions. This decrease is more prominent for add-on acquisitions where companies are able to secure more favorable pricing due to increased carrier appetite and capacity.


  • Stay in compliance with debt covenants and avoid fines/penalties.
  • Don’t cut back on insurance limits, even during financial hardship. It’s never a good idea to reduce the amount of insurance coverage you have. Continue to maintain your coverage to protect your investments, especially if your portfolio isn’t performing well.
  • Use savings from lower insurance rates to either purchase higher insurance coverage limits or add additional types of coverage. Reinvesting in coverage enhances and expands your protection.
  • Employ strategies to manage the potential pitfalls of continuation fund transactions. These strategies include involving an LP Advisory Committee to address conflicts of interest, using third-party valuations to set fair asset prices, and emphasizing transparency with LPs regarding terms and conflicts of interest.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.