Despite the marked turndown in mergers and acquisitions (M&A) activity over the last 12 months, new data released today shows that take-up of Transaction Risk Insurance (TRI) continues to grow as confidence in its ability to pay claims increases.

As one of the world’s leading TRI providers, with underwriting teams based in Continental Europe, UK, US, Singapore and Australia, Tokio Marine HCC (TMHCC), headquartered in Houston, Texas, has drawn upon nearly a decade of claims and payment data from across the globe and across various sectors. In their first TRI Claims Report, TMHCC provide a comprehensive snapshot of the state of today’s Warranty and Indemnity (W&I) insurance market with a focus on the EMEA (Europe, the Middle East and Africa) and APAC (Asia-Pacific) regions.

According to the report, the average notification rate on a TRI policy is 16%, with 86% of these made within one year of deal completion, up significantly from the average of 50% recorded between 2013 and 2019.

The most severe claims have arisen in the EMEA region, with 14% resulting in a loss of over USD5m. While less severe in APAC, claims have been more frequent in this region.

Of these breaches, tax is the most commonly notified, with over a third (37%) of claims in EMEA and 25% in the APAC region relating to this breach type. While the majority of notifications concern tax breaches, they tend to be low severity, uncontentious and quickly resolved, accounting for only 17% of overall losses.

Accounts breaches are the next most commonly notified, representing 17% of all notifications. However, despite the relatively low volume, these claims represent 41% of all payments made by TMHCC. This is followed by contract breaches and property claims, accounting for 11% and 7% of all notifications, respectively.

Finally, sector-wise, manufacturing generates the most notifications, representing 20% of the total, most of which are low severity and settled quickly. Energy, while one of the smallest elements of TMHCC’s overall book, represents 17% of all notifications but accounts for 7% of the most severe losses experienced.

The full complement of data and trends can be found in the TMHCC TRI Claims Report 2023.

“Since 2010, TMHCC has built up considerable W&I claims handling expertise and has a clear track record of significant claims payments,” said Carlos Fane, Claims Manager for Financial Lines & Transaction Risk.

“Over the years, we’ve managed hundreds of claims with settlements totalling tens of millions of dollars, resulting in a huge amount of claims data, from which we can see clear trends which we are now sharing with the wider market.

“Overall, the picture that emerges is that W&I insurance has steadily grown into a key feature of the M&A landscape and that, when things go wrong, policies respond. We shall continue to play our part in ensuring this continues and look forward to sharing our experience and insights in the future.”

Access the full report for all the complete data and trends: https://www.tmhcc.com/en/news-articles/thought-leadership/tri-claims-report-apac-emea-2023

For more information about Tokio Marine HCC, please visit www.tokiomarinehcc.com.