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Research and Briefings

Warranty and Indemnity Risk Map


The market for warranties and indemnities insurance (W&I) in the Asia-Pacific region has developed to the point that it is now commonly deployed in developing jurisdictions to foster the successful completion of transactions. From its start in financial capitals such as London, Sydney, Hong Kong and Singapore, W&I is now being regularly utilized in China, India, Indonesia, the Philippines and throughout Asia. This change has come through a combination of changes in the insurance market and increased demand from financials and corporates engaged in deal activity.   

As the market has matured, we have witnessed an increase throughout the region in the breadth of cover afforded to our clients under warranty and indemnity insurance policies.  These developments have allowed Australia-based sellers to achieve “clean exits” out of investments in developing jurisdictions, and have given buyers greater comfort in transacting that a credit-worthy counterparty is providing financial security backing the warranties. On both the sell-side and the buy-side, W&I can minimise concerns around deal execution. They can also enable bidders to enhance their competitive positioning in an auction process, which is particularly relevant in the current seller friendly M&A market.

Transacting M&A in a climate of uncertainty can make deals more difficult to execute and ultimately driving value can be more challenging. Clients are looking for alternative ways to mitigate risks in an M&A situation and the use of insurance capital is an option for many. 

We have produced a global risk map showing typical pricing and retention parameters for this class of insurance. Premium rates and retention parameters can vary greatly depending on jurisdiction.  This is driven by many risk factors including the nature of the deal environment, deal volume, frequency of litigation, and other macro factors which affect insurer appetite. 

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.