Larger R&W claims prompt insurers to reassess coverage terms
Representations and warranties insurers are seeing larger claims and becoming more selective about the risks they will cover. The market is signalling tighter policy terms, which could mean lower limits, higher retentions and broader exclusions for some M&A transactions.
What happened
Representations and warranties (R&W) insurance is experiencing larger claims, prompting insurers to reassess their appetite and underwriting standards. Underwriters are signalling that some policy terms, including limits, retentions and exclusions, could become less generous.
What it means for consumers
R&W insurance is primarily a commercial product used in mergers and acquisitions, so it is unlikely to directly affect home, auto or travel insurance premiums. Businesses and consumers involved in a transaction could nevertheless face added cost and scrutiny, making it important to compare policy terms as well as price and to consider whether contractual indemnities offer additional protection.
What it means for premiums
No direct premium change has been announced.
Coverage considerations
Insureds may encounter lower available limits, higher retentions or broader exclusions as insurers manage claims severity. Buyers and sellers should review how fundamental representations, known issues and contingent liabilities are treated, and whether the remaining coverage is adequate for the transaction’s risks.