Chapter 1: Author’s Note & Executive Summary

Author’s Note

We are excited to present the sixth annual edition of the Aon Transaction Solutions Global Claims Study.

In this year’s claims study we are shifting the focus of our data analysis to highlight how Aon’s historical claims data can assist clients, advisors, and insurers on their next deal. This means leveraging our vast experience and continuous years of data tracking to help our clients better predict future risks and secure deal value.

Aon has handled over 1,600 global claims and achieved an industry-leading $1.75 billion in recovery for our clients. Realizing the important role that claims performance holds in the transaction solutions industry, Aon has continued to invest heavily in its claims team and data-tracking capabilities. The Aon claims team boasts extensive experience in litigation and insurance claims, spanning several decades. This expertise offers a distinct advantage, enabling the team to deliver tailored solutions by leveraging both real-time data and insights from historical claims. This approach enhances our ability to advise clients effectively on their M&A insurance policies and due diligence strategies. Lastly, the claims team is an integral part of Aon's Transaction Solutions team, which plays a crucial role in mitigating potential risks, optimizing terms, and crafting customized solutions to minimize the likelihood of post-deal disputes.

After years of claims and payments, we can conclude that whether large or small, valid claims are being paid, insurers are accepting multiplied damages where appropriate, and the policies are effectively allowing our clients to mitigate their deal risk exposure.

We trust you will find our analysis informative and thought-provoking. Your questions, feedback, and challenges for potential new angles of analysis in the future are always welcome.

Sincerely,
Aon Transaction Solutions Global Claims Team

Foreword

Aon has been involved in over 1,600 notified representations and warranties (R&W), warranties and indemnities (W&I), and tax insurance claims and helped its clients secure more than $1.75 billion in payments globally. Our team comprises professionals in North America, Europe, and Asia Pacific (APAC), and is ideally positioned to apply our considerable depth of knowledge to help clients realize the value of transactional risk policies. To demonstrate our global expertise, this year we are providing more in-depth data than ever before, including industry-specific data across North America, regional data across EMEA, and developing trends across APAC. We believe Aon’s data provides a unique opportunity for the M&A market to learn from claims made on past transactions to help anticipate how a deal’s risk profile might change based on the target company industry, the jurisdiction, or other variables discussed herein.¹

In North America, 2024 was an active year for claim resolutions. Aon clients received over $300 million in total payments, with a median payment of $5.5 million; both numbers are the highest on record for a single calendar year. While the North American data in this year’s study continues to review overall R&W claim frequency and severity trends, we are excited to present new data analysis that examines multiple industries and how claim frequency, severity, and other risk transfer considerations change based on the target industry. While our general industry data section indicates that there is no one industry that is particularly “high risk,” there are clearly differences in the nature of the risk exposure illustrated in the individual industry sections. The North American overview of tax insurance illustrates that our clients are being reimbursed for valid claims for both contest costs and assessed amounts, and have successfully negotiated tax authority settlements with insurer contribution where appropriate.

In Europe, the Middle East, and Africa (EMEA) in 2024, we saw insurers pay a markedly larger amount in W&I claims, more than 35% of the total amount secured for all years prior. This indicates that the use of the W&I product is well and truly established as a key deal tool and that substantial claim resolutions are being achieved. This year, the EMEA data has also been reviewed through a new lens, with a focus on jurisdictional differences using the target company region as a common denominator. Both Aon and the EMEA insurer data provide insight into the differences in the frequency and severity of claims across UK & Ireland, France, Italy, Nordics, Benelux, DACH, Iberia, and other regions.

APAC continues to build on its claims experience and data from past years. In the Pacific region, claim notifications continue to come in on approximately 20% of policies placed, often related to compliance with laws, tax, and financial statements breaches. Asia notes that there was an increase in the volume and value of M&A transactions in 2024, with a corresponding rise in the use of W&I insurance. The APAC section of the claims study examines the breach frequency for certain countries in the region, the representations that are driving claims, and other notable W&I claim trends and insights.

¹ The information contained in this document is intended to assist readers and is for general guidance only.