Chapter 6: EMEA: Highlights and Introduction

Highlights

1. Since last year’s claims study, we have worked with clients across EMEA on their warranty & indemnity (“W&I”) insurance claims. Insurers indemnified losses of $70.9m for Aon clients throughout 2024.¹
2. Aon’s W&I claims settlements exceed $1.75b globally, highlighting the value this product brings for our clients.
3. To date, the Aon claims team have worked with insurers to recover over $200m in paid claims for Aon’s EMEA clients, with settlements paid in 2024 alone representing over 35% of total payout.
4. Early indications are that 2025 will see continued claims resolutions with substantial settlements.
5. In 2024, we have assisted Aon’s EMEA clients with many new claims whilst also driving a number of pre-2024 claims to resolution; notifications are up 26% compared with 2023.
6. The top breach notifications in EMEA continue to be tax and financial statements, with financial statements breaches continuing to be the top driver of loss.

Introduction

In this EMEA Claims Study, we consider claims trends and success stories with the context of broader commentary on the prevailing M&A market. Once again, we are excited that this study provides a comprehensive overview of M&A insurance and claims activity, compiled from Aon claims and placement data and an anonymised survey of 12 of our key EMEA insurer/MGA partners (the “Insurer Survey”). Aon’s data has been reported to the end of Q4 2024, whilst the Insurer Survey includes data up to the end of Q3 2024. As clients and their advisers become more sophisticated in their use of W&I policies, they are increasingly turning to our dedicated claims team for assistance. The Aon claims team has grown to meet client needs, seeing many more claims and advising clients on recovery against their policies. We encourage clients to seek our support when navigating a claim.

We continue to see W&I insurance notifications increasing year on year, with clients notifying higher severity claims and with larger initial loss estimates. More importantly, as the product matures in EMEA, we are increasingly seeing insurers pay out.

The rise of W&I and claims across European M&A

Although the W&I insurance product originated in the 1990s as a sell-side product, its popularity increased as a buy-side product around the time of the global financial crisis in 2008 and, in subsequent years, it became a valuable product to sellers who needed a clean exit and to de-risk transactions through insurance. Over the past decade, we have observed the early and widespread adoption of W&I insurance in the UK and Nordics, with other Northern European jurisdictions also keen adopters of the product. France and Southern Europe were historically slower to adopt W&I insurance as a deal strategy but it is now a mainstream M&A consideration throughout EMEA. This jurisdictional M&A market overlay influences the claims trends that we are now observing. Our claims team now see claims notifications from across EMEA. In recent years, the motivation to use the product for its intended purpose, to both facilitate a deal and respond to unknown issues discovered post-acquisition, has resulted in more claims. This provides us with an illuminating and growing body of claims insights. As a leading broker whose M&A team were involved in some of the earliest deals, we are watching with interest as the product matures and claims data evolves in real time. As a global claims team, we provide real-time feedback to our W&I and tax broking teams from our claims experience to improve client outcomes.

The peak of deal activity in 2021 was followed by an unsettled economic period of high inflation and interest rates resulting in fewer investments, which are widely acknowledged to have stifled the growth of the M&A market in 2022, 2023, and beyond. Building on 2024, the outlook for 2025 had been cautiously optimistic following the conclusion of elections in key countries. However, many uncertainties (including global trade tariffs) persist. It is to be seen how this will impact the EMEA M&A market and the W&I claims that may subsequently arise.

M&A Perspective: We have seen a marked increase in claims notifications with a number of complex claims successfully resolved for our clients in 2024. This trend reflects a market of increasingly sophisticated clients, supported by experienced and dedicated teams from both brokers and insurers, who are adept at steering claims to successful resolution. The M&A market from 2022-2024 has been impacted by, amongst other things, the rising cost of capital, mixed macroeconomic signals, inflationary pressures and geopolitical uncertainty. This reduced activity, combined with an influx of insurance capital post 2021 has led to a highly competitive market with our data showing the lowest pricing on record and advantageous terms for our clients. As well as price, insurers are competing on breadth of coverage and process efficiency. Throughout this period, claims activity has grown. Whilst macro conditions and uncertainty remain, there are signs of positive growth for M&A as actors acclimatize to the prevailing market conditions. Some insurers contend that the combination of low rates and increased claims pay outs may lead to (and indeed requires) a rate correction. However, we have yet to see this impact the W&I and tax markets in any meaningful way. More positively, competition has driven market-wide innovation, with bespoke insurance solutions and enhancements rolled out for clients together with an increased demand for tax insurance.