The increased adoption of transactional risk insurance as a tool for parties to offload risk in mergers and acquisitions (M&A) has led to a corresponding rise in claims.
The Global Transactional Risk Insurance Claims Report 2023 focuses on claims made against representations and warranties (R&W) policies — also known as warranty and indemnity (W&I) policies — reported and paid in 2022. This year’s report shows how the claims landscape continues to evolve.
Global snapshot
- In 2022, claim notifications increased 25% over 2021.
- The average time to notification increased across all regions.
- The percentage of financial statements claims decreased significantly, while the percentage of claims related to tax, compliance with laws, and litigation increased.
- Marsh insureds received over US$232 million in claim payments in 2022.
- The bulk of amounts paid in 2022 came from financial statements breaches notified in previous years.
- North America
- EMEA
- Asia Pacific
North America snapshot
North America registered increased claims volume in 2022, with 184 reported claims on 119 transactions, compared to 160 claims on 97 transactions in 2021. The increase was not as high as we anticipated given that Marsh placed policies for approximately 1,000 transactions in 2021 and we have historically seen one in five deals receive a claim, most of which are reported within a year of the deal closing.
EMEA snapshot
In 2022, we saw a shift from a promising first half of the year — during which the high volume M&A trend of 2020 and 2021 continued across EMEA— to a more scattered view in the second half of the year, with some regions showing significantly lower transaction volumes, in particular for larger deals. This change largely correlated with the overall drop in M&A activity across the globe, most particularly for the financial sponsor segment.
Asia Pacific snapshot
We saw continued growth in 2022 with the entry of various new insurers into the regional market and a general expansion of insurer appetite for Asia-Pacific transactions and related risks. We welcome the domestic expansion and we foresee that a key differentiator for carriers, from a placement perspective, will lie in their ability to pay claims, and to do so seamlessly and expeditiously.