Mactavish has appointed two senior private equity leaders to its newly formed Private Equity Advisory Board, aimed at addressing gaps in insurance coverage across the private equity sector.
Steve Darrington (pictured above), former partner at Phoenix Equity Partners, and Yann Soulliard, former managing partner at Lloyds Development Capital, will contribute a combined 50 years of industry experience to support Mactavish’s engagement with the sector, which generates billions of pounds in turnover.
The advisory board will focus on improving insurance arrangements for private equity firms, many of which Mactavish says remain unaware of the risks within their own organisations and the exposures stemming from their portfolio companies.
Mactavish chief executive and founder Bruce Hepburn said many firms purchase insurance that is not fit for purpose and does not respond effectively when claims arise.
Mactavish highlighted several areas where it has identified deficiencies in insurance cover for private equity-backed businesses. Examples include companies providing on-site IT support without cover for claims related to work on third-party systems; fintech firms advised not to purchase professional indemnity or cyber insurance despite facing material exposure in these areas; sole-source manufacturers left uninsured for supply chain disruptions; and insurance programmes that exclude key entities, territories or services.
Over the past year, private equity (PE) involvement in the UK's insurance sector has experienced notable developments, reflecting both growth opportunities and emerging challenges.
Despite a global decline in overall PE deal volumes and values – 21% and 24% respectively in 2023 – investments in the insurance sector have risen. In a report, consulting firm McKinsey said that this trend indicates a growing interest among PE firms in insurance assets, likely due to their potential for stable returns and diversification benefits.
With the insurance market entering a soft phase, Mactavish said premiums are currently declining. While this may reduce costs for corporate buyers, it also limits the revenue insurers have available to pay claims.
Mactavish expects these conditions will lead more insurers to decline claims by identifying weaknesses in policy wording, potentially forcing companies into litigation if they want to secure a payout.
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