Liria Martinez-Salmon, managing director and head of Southern Europe at Devonshire Underwriting, told Reinsurance News that the number of claims notifications in the Southern European traded risk insurance market has increased by more than 100%.
We recently discussed the current trading risk market conditions with Martinez-Salmon and highlighted the significant increase in claims notifications.
“We are seeing over 100% year-on-year growth in notification volumes. While this impact has not yet fully penetrated the market due to broader macroeconomic conditions and lower transaction volumes, I expect the impact to become more pronounced in the short to medium term,” she said.
Martinez-Salmon highlighted the increased competition within the market, noting that pricing and underwriting terms are constantly changing. “The market is becoming increasingly crowded, creating highly competitive conditions. Prices have never been lower and coverage wider in southern European jurisdictions, and if this trend continues, it raises questions about product sustainability.”
Across jurisdictions, she said Spain remains the most mature transaction risk market in the region, with “products and processes now well established”, with Italy, France and Portugal following closely behind, albeit at different stages of maturity.
In fact, according to Martinez-Samon, Spain has already reached a similar level of penetration as the Nordic markets, with the majority of insurable transactions already insured.
“As a result, W&I’s growth is increasingly dependent on market share, while tax and contingent risk products still offer significant room for expansion. We also see significant growth potential for tax and contingent risk solutions in all jurisdictions, particularly in Italy and France, where there is considerable room to fill,” she explained.
Regarding key market growth opportunities, Martinez-Salmon told Reinsurance News that clients continue to seek underwriting expertise and transaction-specific solutions. “The biggest opportunity lies in adding value to customers through expertise and high-quality underwriting.”
“As market conditions become more challenging, clients increasingly require experienced underwriters who can help build solutions rather than just provide capacity,” she added.
Martinez-Salmon also emphasized that the current economic environment is creating opportunities for more complex transactions. “Based on Devon’s years of experience handling complex, market-leading transactions, these are areas where significant value can be added. Given the economic uncertainty over the coming months and years, demand for specialist and bespoke solutions is likely to continue to increase.”
Martinez-Salmon explained that in addition to opportunities, current macroeconomic conditions are also impacting M&A activity and the adoption of transaction risk solutions, with Devon seeing fewer deals overall and the value of deals coming to market generally being smaller.
“Deal completion times have also lengthened significantly, with negotiations often taking five times longer than before.
“There are still substantial opportunities in the market, but deals are highly competitive and the road to completion is filled with additional uncertainty.
“Particularly in Spain, political developments and the upcoming elections may also affect market sentiment and economic activity. Once the results are known, we may see a clearer picture and possibly a boost in confidence,” she said.
In transactional risk insurance, as in other insurance markets, buyer and seller dynamics vary by region, and when it comes to the differences between southern Europe, the UK and northern Europe, Martinez-Salmon noted that “the underlying risk allocation dynamics are actually very similar.”
“The main difference is market maturity and familiarity with transactional risk insurance. In the UK and Northern Europe, transactional risk products are already highly mature and widely understood, so there is little need for education on their use. In Southern Europe, despite growth in recent years, there is still a need to explain the product’s benefits and mechanisms,” she continued.
The conversation then turned to Southern Europe’s demand for transaction risk insurance over the next 12-24 months, with Martinez-Salmon highlighting continued demand in France and the positive outlook for other countries.
“France has historically been a challenging market and adoption will take time, but penetration is growing steadily.
“In Spain and Italy, transaction risk insurance is already established among major market players. Therefore, I do not expect demand to decline. Instead, growth in the coming years is likely to follow broader M&A activity.
“Portugal remains a unique case due to the size of the market. Transaction values are generally much lower than in other regions.
“One of the key factors to watch over the next few years will be how capacity providers respond to increased claims activity. It will be interesting to see whether insurers reduce capacity, tighten terms or otherwise adjust their appetites,” she said.
Finally, Martinez-Salmon explains how Devon Underwriting is positioning itself to respond to these trends and support clients in the region.
“When economic conditions are strong, claims expectations tend to be lower. However, in more uncertain environments, deal structures become increasingly complex and require more expertise to navigate effectively.
“This is where Devon is particularly advantageous. Complex transactions require specialized underwriting knowledge and deep understanding of local markets. While some MGAs focus on achieving higher transaction volumes in a limited number of jurisdictions, Devon combines technical expertise with broad market coverage across Southern Europe, allowing us to support clients on a wide range of challenging and complex transactions,” she said.
