With the right insurance solution, applied early and structured well, sellers can exit more cleanly, buyers can gain certainty on specific exposures, and transactions can close faster without the need for escrows or prolonged negotiations.
What are known risks and how do they affect M&A deals?
In Asia’s evolving mergers and acquisitions (M&A) landscape, known risks such as tax, legal, or regulatory issues identified during deal diligence can affect deal value, prolong negotiations, and create uncertainty for both buyers and sellers.
As transaction structures become more sophisticated across the region, tax insurance and contingent liability insurance are playing an increasingly important role in helping deal parties manage risks. By transferring specific exposures to the insurance market, these solutions can help provide greater certainty, facilitate cleaner exits, and support more efficient negotiations.
Watch: How insurance keeps known risks from derailing M&A deals
In this short video, Marsh specialists Ai Ling Cheow, Karen Lau and Pin Li Lim explain how tax insurance and contingent liability insurance can help deal teams manage known risks, reduce value leakage and keep transactions on track.
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Reach out to mitigate known risks in your M&A transactions.
How contingent liability insurance helps address known legal and regulatory risks
Contingent liability insurance allows deal parties to transfer specific known legal or regulatory risks to insurers. It is designed for issues identified during due diligence, rather than unknown risks typically covered by W&I insurance, helping both sides move forward with greater confidence.
Marsh has observed keen interest in contingent liability insurance in Asia. In 2025, we reviewed 14 submissions across close to 30 risk types. The most insured legal risks in Asia include title defects in real estate or shares, contractual interpretation risks and historical litigation.
How Marsh mitigated US$40 million of known risk exposure for the buyer of an operations company
After signing a deal to acquire an operations company, a buyer learned about a potential dispute linked to an older transaction involving the target business. In the worst-case scenario, the company could lose ownership of one of its main subsidiaries, which would significantly reduce the value of the deal for the buyer.
With a W&I policy already in place, this newly identified issue could not be absorbed into the existing coverage. Marsh Risk Asia’s PEMA Services advised the buyer on using contingent liability insurance instead and helped design a solution that sat above the existing W&I cover. Our team also structured the cover to lower the premium and improve insurer appetite.
This approach helped the buyer secure insurance protection in a challenging and time-sensitive situation. This outcome demonstrates how clear structuring, focused market engagement, and strong advisory can help businesses manage complex contractual risks in transactions.
How tax insurance helps manage known tax risks
Tax insurance transfers a specific, identified tax risk to an insurer. It helps deal teams manage uncertainty around a tax position, investment or exit structure, or tax issue that may surface years after closing.
For buyers, tax insurance protects returns from post-close tax exposure. For sellers, it can support a cleaner exit by reducing the need for tax escrows or specific tax indemnities.
Adoption of the solution continues to grow in Asia, with Marsh recording 24 deals in 2025, a 50% increase from 2020, when the solution was first launched.
Why Marsh
For over a decade, Marsh Risk Asia PEMA Services has led transactional risk insurance in the region — placing policies across 1,000+ deals and handling complex claims as large as US$80 million. Our team — the largest in Asia, including former legal and tax professionals — brings deep insight into insurer underwriting criteria and the expertise to structure a known risk for cover, ensuring a more efficient path from identified risk to insurance solution.
Work with us to protect your M&A deals against known risks.
Frequently asked questions
Known risks are issues identified before a transaction closes, often during due diligence. They may include uncertain tax positions, defective titles, legal or regulatory disputes, contractual interpretation risks or historical litigation.
Once identified, these risks can be difficult to ignore. They can affect negotiations, increase the need for escrows or specific indemnities, and delay closing.
W&I insurance is typically used to cover unknown risks — issues that were not identified during due diligence and may later result in a breach of warranty under the sale and purchase agreement. It helps protect buyers and sellers against unforeseen exposures that come to light after completion.
Known risk insurance, such as tax insurance or contingent liability insurance, is designed to cover specific, clearly defined exposures that could affect deal value or delay negotiations.
Tax insurance transfers a specific identified tax risk to an insurer, such as uncertainty around a tax position, transaction structure or post-close tax exposure.
Contingent liability insurance transfers specific known legal or regulatory risks to an insurer, such as title defects, contractual interpretation risks and historical litigation.
Deal teams should consider insurance once due diligence identifies a known issue that could affect negotiations, increase escrows or delay closing. Early engagement gives advisers and insurers more time to assess the risk.