Insurers aren’t just adapting to risk - they’re chasing it. Niche policies in cyber, environmental, and automation-related liabilities are no longer add-ons; they’re central to deal-making.
After a sluggish 2023, the M&A space is picking up steam - powered by a sharp pivot toward emerging risks. Private equity firms are buying into specialized insurance not only to shield investments but to drive them. In just the first half of 2024, PE investments in insurance hit $27 billion - already 42% above the total for all of 2023 - much of it targeting underwriting tech and cyber capabilities.
Farrah Ata (pictured), a property and casualty insurance broker for Willis Towers Watson’s M&A practice, has had a front-row seat to these shifts. From automated manufacturing to cyber benchmarking tools, her work reveals how insurers are building tailored verticals for risk lines that didn’t exist ten years ago - and using that infrastructure to accelerate and integrate deals more strategically.
“We’ve seen a huge pattern of acquisition activity happening,” Ata said. “Companies are looking to expand while also diversifying their risk.”
The trend isn’t about acquiring sheer volume - it’s about acquiring precision. Larger firms are targeting smaller carriers and brokers with specialized underwriting expertise or underutilized books of business. Ata pointed to a quiet but strategic deal where Allianz sold its middle market book to Arch.
“Arch saw a gap in their own book of business and probably found that Allianz’s book would bridge that gap,” Ata said. “It made sense for them to buy that book to spread their risk across multiple industries and lines in the middle market space.”
These kinds of acquisitions have a dual effect. They strengthen the buyer’s position in fast-growing or underserved sectors and consolidate competition in ways that can reshape the market. In this case, Ata noted that the ability to shop the same deal to both Arch and Allianz disappeared after the transaction.
“You technically lose a market in one sense,” she said. “But you can also look at it like - now Arch has a broader appetite to partner with on new risks.”
The momentum isn’t limited to carriers. Private equity firms, too, are zeroing in on specialty insurance as a way to diversify their portfolios. While many PE shops still focus on traditional sectors like food or industrials, there’s growing interest in businesses built around emerging risks.
“Some PE firms are focusing on food companies, some just on manufacturing,” Ata said. “But then there’s this growing interest in emerging risks.”
To match that demand, insurers are building “emerging risk verticals” - dedicated units focused on newer exposures like cyber and tech, often created through acquisition rather than internal development.
As deals accelerate, insurers are playing a larger role in post-merger integration, often shaping how a transaction gets done. Ata said her team works closely with underwriters to manage expectations around operational changes.
“Some insurers are going to be more concerned about how a company might change after post-acquisition,” she said. “Are they going to change operations? Management styles? Marketing?”
To streamline that process, several carriers have established private equity verticals - teams trained to understand the unique pace and priorities of PE-backed businesses. Even so, friction happens.
“There are times where we get specific information requests from the insurer,” Ata said. “Sometimes the information needed can be difficult for the company to gather so we need to work through these challenges.”
Underwriting data has become a central part of these conversations. Loss histories, revenue performance, even employee roles are analyzed in detail. Insurtech tools like telematics give carriers added context - especially for auto or manufacturing risks - and help explain past losses or justify coverage decisions.
“You can use telematics to show if drivers are speeding or braking hard and overall company driver habits. It helps you explain a company’s claims history so we can work to build a plan ultimately to improve driver safety and improve the overall risk management of the company,” Ata said.
After a muted couple of years, deal activity is starting to pick up again, despite political uncertainty. Ata believes that there are signs 2025 could be a turning point for both PE firms and insurance carriers looking to deploy capital.
“There are a lot of indicators that 2025 is the year that deal activity is going to pick up,” she said. “The exact timing is yet to be seen but we are optimistic the market conditions over the next few months will lead to an uptick in deal activity.”
As specialty lines gain strategic weight, insurers and investors alike are racing to stake their claims - not just in policies, but in platforms that will define the next chapter of risk.
