Doing Nothing? Here’s The $44B Price Tag On Productivity

Good morning, ! It’s Wednesday and we look at the status of state action in the medicaid expansion, the share of insured CAT losses, and Europe’s cyber insurance coverage.

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DATA DIVE

The $44B Cost of Doing Nothing

Call it a fiscal boomerang: the U.S. spends more by not covering people. The Medicaid expansion holdouts (just 10 states) account for 1.4 million uninsured adults and a cascade of economic fallout. Employers face 9% cost hikes per employee, while the uninsured rack up medical debt and delay care—pushing minor issues into major claims. One stat to make CFOs wince: depression alone costs $44B in lost productivity annually. Add in mental health gaps and chronic condition mismanagement, and the math gets grim fast.

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TREND OF THE WEEK

Protection Gap Meets Peak‑Year Risk

In 2024, global insured nat‑cat losses hit $137 billion, closely tracking the long‑run 5–7% real‑growth trend and pushing total economic losses to $318 billion—leaving a $181 billion protection gap. Primary perils like hurricanes and earthquakes remain the wildcards—just one mega‐event can catapult losses well above trend, as 2017 demonstrated with losses double the norm. Swiss Re now pegs a 1‑in‑10 chance insured losses hit $300 billion in 2025. We’re on a steady upward path—but vigilance is key. Reinsurance must stay well‑capitalised and capital growth must outpace exposure. (More)

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MARKET MOVERS

INSURTECH CORNER

Cyber Insurance: Europe’s Coverage Gap

Only 26% of OESs (Operators of Essential Services) in the EU carry cyber insurance—an alarmingly low figure in an era of escalating digital risk. Coverage rates vary widely: Eastern Europe lags furthest behind with just 12% coverage, while Western/Northern Europe leads at a still modest 45%.

This fragmented landscape highlights a growing commercial opportunity—and a policy risk. The EU Cyber Resilience Act and upcoming NIS2 Directive are set to raise cybersecurity standards across member states. As compliance costs mount, demand for cyber coverage and cyber risk quantification tools is likely to spike.

For InsurTech firms, this is fertile ground. From AI-powered underwriting to parametric cyber products, startups are already positioning to serve a vastly underpenetrated market.

Why it matters: The EU cyber insurance market is underbuilt relative to risk exposure. Expect insurtech-driven innovation, regulatory tailwinds, and rising enterprise demand to drive rapid market expansion in the next 3–5 years.

DEAL OF THE WEEK

BrokerLink Buys Three More: Quiet Consolidation in Canadian Insurance

BrokerLink, the M&A engine behind Intact Financial, has added three more brokerages to its growing footprint in Canada. The Ontario-based Avergate Insurance and Keyes Insurance, along with Alberta’s CDM Insurance, now join a national network that’s quietly swelling past 200 branches and 4,000 employees.

Terms of the deal weren’t disclosed, but the strategy is clear: regional bolt-ons that deepen BrokerLink’s specialty exposure. Avergate brings expertise in high-net-worth and cyber insurance, while Keyes adds nearly a century of small-town presence. CDM shores up BrokerLink’s personal lines business in Alberta.

The firm’s March spree—adding Bankers and Traders, Aspen, and SeaLand—already signaled aggressive expansion. This latest trio confirms it: BrokerLink is on a roll-up tear, building a full-spectrum, coast-to-coast platform in Canada’s fragmented P&C market.

Why it matters: In an industry dominated by relationship-driven sales and legacy tech, scale and specialization are now the winning formula. For PE watching from the sidelines, this is a playbook worth studying. (More)

TOGETHER WITH GELT

When a 9-Figure Exit Almost Fell Apart—How Smarter Tax Strategy Saved Millions Before Close

One of our clients, a managing partner at a mid-market PE firm, was weeks from closing a 9-figure exit. LOI signed, diligence smooth—but then a $7M tax surprise surfaced tied to equity comp and earnout structure. Their CPA panicked. We stepped in, restructured the deal using 1202 stacking and charitable trusts, and saved the partners millions—without delaying close.

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MACROECONOMICS

Deal Pipelines Meet the Macroeconomic Blender

Whether we’re heading for a Soft Landing, No Landing, or Recession, one thing is certain: 2025’s dealmaking playbook requires flexibility. The US economy’s surface strength belies pockets of strain, with 45.5% of PE sponsors already spotting recessionary signals. A Soft Landing supports steady deal flow (think healthcare, software), while No Landing pushes sponsors into defensive mode and banks toward private credit. The Recession scenario? Expect distressed deals, creative structures, and falling valuations. The kicker: divergence reigns—bankers, sponsors, and corporate teams all see different futures. In this environment, smart sponsors will stress-test across all scenarios, balancing sector bets and financing approaches. Because the only macro certainty right now is... uncertainty. (More)

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TOGETHER WITH MONEY.COM

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TWEET OF THE WEEK

"The secret of change is to focus all of your energy not on fighting the old but on building the new"

Socrates