Our January 2026 update described a strengthening role for insurance due diligence in mid-market transactions, particularly where regulatory and cyber issues are present. The first half of 2026 has been more complex than many anticipated. While Australian M&A activity remains resilient, the global private equity environment has been hit by a series of shocks that are reshaping deal dynamics, investor expectations, and the regulatory backdrop. Against this setting, due diligence has become even more central to value protection and value creation.
In this environment, insurance due diligence is moving from “nice to have” to “expected”. A thorough review of the target’s risk profile, insurance programme, and claims history can uncover hidden liabilities, inform W&I structuring, and support more confident bidding in competitive processes. As regulatory and operational risks rise, we are seeing buyers use insurance solutions more strategically within the Go-Forward programme to transfer specific exposures rather than simply relying on contractual protections.
What we have seen throughout June
Several regulatory developments have moved from “incoming” to “live”, intensifying the compliance and assurance burden on transactions.
ACCC merger regime now in force
The new merger control framework, including mandatory notifications and more prescriptive information requirements, is now shaping deal timetables and transaction design. Pre‑deal planning has become more detailed, with competition, market definition, and behavioural remedies considered earlier in the process. This is extending diligence timelines and increasing the need for coordinated legal, economic, and operational analysis.
Early engagement of advisors in the due diligence process is becoming increasingly more important.
Insurer behaviour
Insurers reward strong diligence and penalise rushed or incomplete processes. They are particularly sensitive to cyber, privacy, employment, tax, environmental and supply-chain exposures.
Legal and regulatory developments
Budget tax reforms and private credit scrutiny increase the importance of reviewing asset values, debt maturity, trust structures, tax assumptions and counterparty resilience.
Privacy, cyber and data governance
With ongoing high‑profile breaches and evolving privacy reforms, cyber and data‑related due diligence has deepened further. Buyers are seeking granular visibility into security architecture, detection and response capabilities, data classification, and regulatory exposure, particularly where large customer datasets or sensitive information are involved.
These regulatory shifts are reinforcing a more compliance‑driven, documentation‑heavy diligence environment, where gaps can materially affect valuation, deal structure, and post‑completion integration plans.
Climate risk in due diligence
Climate risk now shows up in diligence in three distinct ways, each of which can materially affect pricing, deal structure and post‑completion plans:
- Physical risk — exposure to extreme weather, heat, flood, fire and supply‑chain disruption. Buyers are increasingly mapping asset locations against climate hazard datasets and stress‑testing business continuity plans. For infrastructure, agriculture, logistics and energy‑adjacent assets, this is becoming as important as traditional operational risk review.
- Transition risk — policy, technology and market shifts as Australia and global markets decarbonise. This includes carbon‑price exposure, emissions‑intensive processes, customer preference changes, and the risk of stranded assets. Transition risk is now a core part of earnings‑quality analysis, especially where future regulatory tightening is likely.
- Liability risk — misstatements, greenwashing, inadequate disclosures, or failure to meet emerging regulatory obligations. Litigation and regulatory enforcement are rising, and buyers are scrutinising climate claims, sustainability marketing, and emissions data with far more scepticism.
Insurance DD now routinely includes review of privacy frameworks, past breaches, regulator engagement and alignment with emerging obligations.
AI and technology impact
AI diligence tools can speed review but should not be treated as conclusive. Assumptions and exceptions must be documented.
What policyholders should do now
Use diligence to improve insurability, not just transaction speed. Prepare a risk-transfer map before binding transaction cover or post-completion programmes.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2026
- Claims
- Workplace Risk
- Corporate and Multinational Risk
- Construction, Property and Development
- Financial Lines
