Increase in seller-driven W&I
Other key trends include:
Sellers and their advisers are increasingly initiating the W&I insurance process early on in the transaction process to facilitate the auction process and make the transaction more attractive to potential buyers. Employing a ‘hard’ or ‘hybrid’ staple process gives sellers control and visibility over the process and the likely coverage position.
Synthetic warranties
There is increasing appetite in the insurance market for insurers to cover a synthetic set of warranties and/or synthetic tax covenants. Rather than sellers giving warranties, the insurer will instead cover their own set of warranties where wider scope of coverage is possible if supported by diligence of the transaction.
Global expansion
Insurers are becoming increasingly prepared to provide coverage for transactions conducted in territories previously perceived to be difficult in terms of insurability, such as in Africa, parts of Asia and Latin America.
Increased risk coverage
Insurers are moving out of their comfort zones in being prepared to consider covering risks that would traditionally be considered off limits such as state aid risk and transfer pricing provided the right level of diligence can be provided to support insuring such risks.
Increasing claims
While many W&I insurance claims are resolved through negotiation, mediation or arbitration, some are now reaching the courts, including in markets where W&I insurance is still an emerging product.
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