Broker Aon has said there is a noticeable uptick in claims around merger & acquisitions activity amid a rise in the use of Warranty and Indemnity (W&I) insurance.

Aon and data company Mergermarket have issued the results of their Global Transaction Solutions Claims Study, which charts a surge in the utilisation of Representations and Warranties (R&W), also known as W&I which has spurred a heightened emphasis on claims activity.

The report found while the M&A market and R&W policy placement slowed globally in 2023, claims activity remained steady, with Aon clients submitting more than 140 new R&W claims last year. it brings the total number of claims that Aon clients have filed on policies placed in North America to more than 950 through 2023. Of those claims, 39 percent have settled within the policy’s retention, 17 percent resulted in payment by the insurer, 24 percent remain active, 16 percent are inactive and 4 percent have been denied.

To the end of last year, R&W insurers have paid more than $1 billion to Aon clients in North America and recognised more than $1.5 billion in total loss (including retention amounts). More than $550 million of this amount has been paid in the last three years.

To date, insurers have paid over $120 million to Aon clients on W&I and tax claims in EMEA, with over $20 million paid since the last publication.

The competitive landscape of the transaction solutions insurance market in 2023 favoured insured parties, characterised by reduced pricing and an expanded scope of coverage Aon added. Meanwhile, the performance of insurers in handling claims has emerged as a pivotal factor, distinguishing leaders in the market.

“Gaining insight into global M&A insurance claims activity is crucial for our clients to manage risks effectively and help our clients make better decisions. This study highlights that while clients rely on policies to safeguard their investments, a collaborative approach among stakeholders is essential for a smooth claims process. More often than not, when we see that collaborative approach, we see positive and appropriate resolutions for Aon clients,” said Stephen Davidson, head of claims for Transaction Solutions at Aon.

Building upon previous studies, the insurer survey now includes respondents from both North America and EMEA to provide insights into their claims experiences and to incorporate them into the findings. This year, 18 insurers participated in Aon’s North American Transaction Solutions Insurer Survey and 14 insurers participated in Aon’s EMEA Transaction Solutions Insurer Survey, enhancing the firm’s view of claim performance and trends in the transaction solutions market.

“The complexities of M&A insurance claims underscore the importance of stakeholder engagement in ensuring a seamless claims experience. At Aon, we consistently strive for favourable resolutions, reflecting our commitment to client satisfaction,” said Claire Fleetwood, senior claims advocate in M&A and Transaction Solutions at Aon.

“As the transaction solutions market matures, sophisticated purchasers are continually gaining more insight into claims handling across the industry. Clients are no longer just looking for the policies to provide them solutions on the front end of a deal, but to deliver meaningful recovery when their investments suffer a legitimate loss post-close resulting from a breach of the transaction agreement.” said Anthony Dragone, Senior Vice President Claims Team, M&A and Transaction Solutions, Aon.