Aon study highlights key market differentiator in insurance sector

The latest Global Transaction Solutions Claims Study by Aon and Mergermarket emphasizes the importance of insurers’ claims handling in the transaction solutions insurance market. Despite a slowdown in M&A activity and representations and warranties (R&W) policy placement in 2023, Aon clients continued to achieve favorable outcomes in the claims process, it was noted.

The study revealed that Aon clients submitted over 140 new R&W claims last year, bringing the total to more than 950 in North America through 2023. Of these claims, 39% settled within the policy’s retention, 17% resulted in insurer payments, 24% remain active, 16% are inactive, and 4% were denied.

R&W insurers have paid over $1 billion to Aon clients in North America, with $550 million paid in the last three years. Claims filed over 12 months post-transaction closure resulted in more than $300 million in payments. In EMEA, insurers have paid over $120 million, with more than $20 million paid since the last report. Australia and New Zealand continue to see claims on one in five warranty and indemnity (W&I) policies placed since 2012.

The competitive landscape in 2023 saw reduced pricing and expanded coverage, with insurers’ claims performance emerging as a critical factor. Clients now prioritize fair and efficient claims processes over pricing alone.

“Gaining insight into global M&A insurance claims activity is crucial for our clients to manage risks effectively,” said Stephen Davidson, head of claims for transaction solutions at Aon. “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.”

Aon transactional risk solutions

Aon helped clients navigate over 150 new claims in North America and 48 in EMEA in 2023. In Australia and New Zealand, historical claim rates remain steady at nearly one-in-five policies. The study now includes more comprehensive data from North America and EMEA, with 18 insurers participating in Aon’s North American survey and 14 in the EMEA survey.

“At Aon, we consistently strive for favorable resolutions, reflecting our commitment to client satisfaction,” said Claire Fleetwood, senior claims advocate in M&A and transaction solutions at Aon.

In 2023, Aon assisted clients in securing nearly $250 million in losses paid in North America and nearly $50 million in EMEA and APAC.

“As the transaction solutions market matures, sophisticated purchasers gain more insight into claims handling across the industry,” said Anthony Dragone, senior vice president for the claims team, M&A and transaction solutions at Aon.

Key findings of the study:

• R&W insurers paid over $1 billion to Aon clients in North America through 2023.
• Compliance with laws has become the third most significant loss driver.
• The average loss estimate for claims noticed from 2020 to 2023 increased to $13 million.
• Industries showed varying breach types:
  • Retail and consumer sectors had high compliance-with-laws breaches.
  • Financial services had more material contracts breaches.
  • Energy companies were more likely to cite breaches of the condition-of-assets representation.

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