Global Claims Study

Overall Claims Picture Vs Last Report

R&W claim frequency has increased marginally in North America since 2023, after a few years of a reduced claim rate between 2020-2022. Recovery amounts have increased as well. Since 2023, we have seen an increase in the average and median claim payments made to Aon clients, reaching a record high median payment of $8.2M in 2025 (See Figure 1). With the 2025 increase in larger deals, the number of large claims made on R&W policies could also rise correspondingly.

Paid Claims compared to Policy Limits

Figure 3 illustrates the payments received by Aon clients in North America as a percentage of policy limits. Overall, 23% of paid claims were greater than 60% of the policy limit and 14% of paid claims were greater than 80% of the policy limit. Further, 8% of payments were full limit payments, with a number of those claims involving a situation where the insurer recognized the client had suffered a loss well in excess of the policy limits. The meaningful percentage of claims being paid in excess of 60% of the policy limit suggests, in our view, that insureds who purchase 10% of EV may be making a commercially reasonable choice in many circumstances, although appropriate limits will depend on the specifics of each transaction. It is worth noting that this data has not changed notably over the last number of years. This is interesting given that each annual refresh of the data introduces a diverse mix of new claim settlements—spanning different breach types, deal sizes, underwriting approaches, and diligence standards—and, based on this dataset, indicates that the pattern of insurers actually paying R&W claims has remained remarkably consistent.

Claims Frequency

An additional factor contributing to the higher claim payments in recent years is the number of claims asserting loss on the basis of a multiple (or other calculation resulting in more than dollar-for-dollar loss). As shown in Figure 6, an average of 20.6% of all claims on policies placed between 2021-2025 alleged more than dollar-for-dollar loss, compared to 13.5% of claims on policies placed between 2016-2019 (with 2020 being an outlier year at 6%). In 2025, 68% of the total amount paid to insureds was attributable to loss calculated on the basis of a multiple, driven largely by claims alleging breaches of the financial statements or material contracts representations. Prior to 2025, 48% of the total amount paid arises from loss that is greater than dollar-for-dollar. In addition, in this year’s Aon North America Insurer Survey (“Insurer Survey”) 67% of insurer respondents reported they have observed more claims alleging loss on the basis of a multiple in recent years. This is an increase from 41% of insurers in last year’s survey.

As claims become more complex, having an experienced claims team that can strategize with and advocate for its clients is essential. As shown in Figures 4 and 5, Aon clients have resolved more claims above $10 million on primary policies, and above $20 million on excess policies, at a higher rate than the rest of the market. The vast majority of Aon claims work their way through the claim process successfully, with only 3% being denied and 1% progressing to arbitration or litigation to reach a resolution.

Multiplied Damages

Despite significant M&A market volatility since 2019, claim frequency has remained relatively steady, with only a modest increase since the low point in 2020. (See Figure 7.) While Aon’s 2023 and 2024 policy years are trending toward an annual claim rate above 20% for the first time since 2017, when viewed alongside the Insurer Survey data, it appears that overall R&W claim frequency will remain within the historic 16-20% range. Figure 8 illustrates how Aon’s notification rates have developed as individual policy years have matured. 2023 and 2024 remained about 3-5% higher than the prior four years, while 2025 started slightly below the typical rate after 6 months of data.

Claim Trends by Client Type

When we look at the difference in claim frequency between non-corporate clients and corporate clients, non-corporates have a slightly lower claim frequency year-over-year, but that gap has not resulted in a significant difference in losses paid. (See Figures 9 and 11.) 49% of claims have come from corporate clients since 2019, while they only represent 36% of total deal volume in that same period. (See Figure 10.) However, paid losses continue to remain in line with the percentage of deals between each buyer type. Non-corporates represent 64% of total deal volume and have recovered 63% of losses paid since 2019. The frequency gap continues to be balanced by a larger median and average payment amount on non-corporate claims.

Buyer Type Trends (2019–2025)

Deal Size Trends

Figure 18 displays the percentage of claims, paid losses, and overall policies (without consideration of premium rates in those bands) placed within four different enterprise value (EV) bands.  Deals with an enterprise value of less than $100 million comprised 41% of the total claims filed on Aon policies while accounting for 34% of all deals. The Aon data has consistently shown a higher claim frequency on deals within the lower enterprise value bands, while experiencing incidences of heightened severity on deals with a higher enterprise value.

These results are in line with Aon’s expectations.  Transactions with an enterprise value of less than $250 million are more likely to have a higher frequency of claims given the lower retentions. Conversely, we would expect deals with a larger enterprise value to have greater recoveries as the retentions and available limits on those transactions are larger, and it generally takes a bigger problem to cause a buyer to assert a claim.

Notification timing

We continue to track the timing of claim notices in relation to the closing date. As seen in Figure 19, when looking at policies where coverage for general representations has already expired, 49% of claims submitted by Aon clients were noticed within 12 months of closing. For the first time, more than half of claim notices are coming in more than 12 months post-closing.  Nearly $700 million of Aon’s total paid loss is attributable to claims noticed more than 12 months post-close. As observed in past Aon claims publications, this demonstrates a key differentiator for the use of R&W insurance compared to a typical one-year seller escrow.  The most common breach types noticed after 12 months remain compliance with laws (23%), tax matters (21%), and financial statements (13%). These notifications more than 12 months post-close are predominantly third-party claims, whose discovery timing is outside the policyholder’s control. Examples include various types of audits, and consumer and employee class action complaints.

Tax Claims Frequency

Furthermore, as shown in Figure 22, insurers report experiencing a modest increase in claim frequency across their tax books. While 50% of insurers state that they are receiving the same number of claims as in prior years, 41% are experiencing an increase in claim frequency—compared to only 9% who are experiencing a decrease in claims frequency. It should be noted, however, that of the 41% experiencing higher claims frequency, 33% are seeing only a slight increase, while just 8% report a significant increase. Moreover, each individual insurer’s historic claim experience is going to influence whether a “slight” versus “significant” increase is reported. Overall, an increase in  the number of claims is to be expected as the use of tax insurance becomes more prevalent, the existing policies in place mature and we see how the variance in the types of risks being underwritten and the size of the policies being placed lead to different types of claims.

Tax insurance policies typically include a seven- to ten-year period in which to make a claim. Aon data shows that the time from policy inception to a notice of a claim or pre-claim notice of a general audit is 26 months on average, while the median is 22 months. Last year we noted that, due to expanded insurer risk appetite to cover risks following the commencement of an audit, we expected to report more claims at or near the policy inception date. So far, we have seen the average time to notice tax claims drop four months from the 28-month average reported last year.

Energy Tax Credits

Policies insuring energy tax credits have been a significant driver of growth across the tax insurance market. The volume of energy tax credit policies that Aon has placed is approximately double that of other Tax policies including M&A and non-M&A. While there have been concerns expressed that energy tax credit insurance could present a systemic risk by prompting tax authorities to pursue broad challenges to insured structures, and we have not seen tax authorities take this type of approach nor do we believe that this would result in more successful challenges to the insured tax position.

As noted above, 4.1% of all Aon placed tax policies have had a claim and, of those, 43% relate to renewable energy tax credit policies. While some of these claims have already been paid, most remain active. Given the long-tail nature of these contests, the loss data is still in its infancy, and over time, the percentage of claims resulting in a payment is expected to climb. However, as an exception, recapture risk is not long-tail in nature, stepping down 20% annually, providing insurers certainty with respect to this risk earlier in the policy period.

Due to the complexity of the underlying agreements and structure of tax credit risks, there are multiple avenues for a challenge from a taxing authority.  According to the Insurer Survey results in Figure 23, insurers have seen claims arise from audits of six different types of parties: (1) the project company/Holdco; (2) the project developer/sponsor; (3) the tax equity investor; (4) the tax credit seller; (5) the project company/Holdco as the tax credit seller; and (6) the tax credit buyer.  Moreover, the party most frequently audited varies, as Figure 23 shows that four different parties are named by insurers as the top party audited on their claims.

Payments

Since last year’s study, our team has resolved tax insurance claims resulting in seven, eight, and nine-figure payments to our clients. These payments varied from reimbursements for contest costs, reimbursement for settlements reached with the tax authorities, as well as payments to cover amounts the tax authorities successfully asserted were due. For tax insurance policies placed between 2016 and 2025, responding insurers reported that, on average, 58% of claim payments were below $1 million; 10% of claim payments were between $1 million and $10 million; 12% of claim payments were between $10 million and $20 million; while 20% were greater than $20 million. By comparison, as shown in Figure 24, Aon’s data shows that only 23% of all claim payments were below $1 million, 23% of claim payments were between $1 million and $10 million; 16% of claim payments were between $10 million and $20 million; while 38% were greater than $20 million. This discrepancy could be attributed to the Aon team’s long history in tax insurance (before many others started placing tax insurance policies), as well as the size of the tax insurance policies that Aon has placed, which has increased over the years. In addition, these are nascent data sets as tax claims have only recently begun to resolve. We will continue to monitor payment trends as the claims history continues to evolve and mature.

Over the past few years, our team has gained extensive and invaluable knowledge in facilitating the resolution of tax insurance claims. Insurers continue to be responsive, cooperative, and have timely responded to approval requests throughout the audit process. The approach with the insureds generally has been collaborative, as the insureds, insurers, and their counsel often view the tax claim as a partnership in defense of the covered tax position. In situations where Aon clients have recovered assessed amounts under tax insurance policies, insurers appropriately covered the tax loss, interest, penalties, contest costs, and made our clients whole via the gross-up mechanism in the policies. In particular, the significance of the non-tax losses (including interest, contest costs, and gross-up component) in tax policies has been clear. Indeed, in certain circumstances, it has comprised a significant portion of the total amount paid out to the insured, and as such, these costs should be taken into consideration when deciding the amount of insurance that will be purchased. The running interest component and the changing tax rates applicable to gross-up costs can also create different complexities throughout the claim process, incentivizing creative solutions or the exploration of settlement with the taxing authorities in certain discrete situations.  Aon has assisted clients in navigating these situations and worked with insurers to deliver meaningful protections and recoveries to clients. In all, this has led to over $350 million recovered under tax insurance policies for Aon clients. Given the low claim rate and number of large payments, tax claims continue to present a low frequency proposition with the possibility of more significant severity.

The negative developments described in last year’s study on single case judgment preservation insurance (JPI) policies, protecting significant judgment amounts, have indeed led to a reduction in carrier appetite—not only in judgment preservation insurance, but also in the broader contingent risk market, even as M&A-tethered contingent risks have performed exceedingly well.

At the same time, the reporting around these products brought increased client awareness of the many ways in which legal positions insurance can help ringfence identifiable low-risk issues in a transaction, providing openings for insurers to participate in more measured opportunities. These include multiple trigger releases of escrow and other trapped capital, as well as other types of legal position risks, which include (1) long tail liability forecasts, (2) successor liability, (3) regulatory risks, (4) commercial disputes, and (5) class action settlements.

The differences between claims experience on JPI versus other types of contingent risks is stark. Across Aon’s historical portfolio dating back to 2014, just 8.1% of policies placed have resulted in carriers paying a loss (each was a limit loss), with all of those instances occurring on JPI deals.

The remaining 91.9% of Aon’s bound deals, comprised in large part of adverse judgment insurance policies, have yielded no losses to date. The common themes of these well-performing risks is that multiple triggers occur before a loss can arise, such as:

• An instance where a claim may never be formally filed or an investigation may never develop into formal action;
• The underlying liability and damages merits are strong and even if liability is found, there are successor liability defenses; and/or
• The damages can be cabined so that the insurance program can be properly structured on a catastrophic loss-only basis.

Indeed, the market has begun to view what historically has been known as contingent insurance in two parts: litigation risk insurance, for which there is diminished appetite, and legal position insurance, which because it often does not involve active litigation and provides multiple off ramps, is attracting more capacity.

Consistent with the other transaction solutions product lines, Aon continues to observe that the carriers performing better within this class have deployed across a diversified portfolio, thereby benefiting from the non-systemic nature of each risk transfer opportunity.

W&I Claim Frequency

Claims activity on W&I insurance has matured with client engagement. Notification frequency is climbing: in 2025 alone, notifications made on policies placed by Aon were up 47% from those made in 2024, and projected ultimate claim frequencies for the 2025 underwriting year are expected to exceed the long‑standing 20% benchmark. For the 2023 cohort, insurers are already reporting a 20.3% notification rate with c.4 years of cover still to run.

Notification Frequency

These trends suggest a structural shift towards earlier and more frequent notifications across the market. There are potentially various reasons why this could be the case. The fast-paced W&I underwriting of 2021, the following years of lower deal activity allowed greater time for policy wording negotiation, which could mean that insureds both became more comfortable with the wording provided and also were more knowledgeable and familiar with the policy, resulting in insureds being better positioned to bring claims.

With the M&A market quieter in the early part of 2025, our claims team saw an increase in post-close diligence. Insureds considered not only the next transaction, but also the assets held, to ensure they were best placed to move as market conditions improved. However, the M&A market has now picked up, and as we are still (including in Q1 2026) continuing to see an increase in claims, it may be that these trends reflect a behavioural change in insureds and their advisers, with better knowledge of the product and a sophisticated understanding leading to more awareness of possible coverage and claims being notified earlier.

Figures 29-31 show insurer data around the most commonly cited breaches of warranty, most commonly established breaches of warranty, and those warranty breaches which drive the greatest loss. Insurer data broadly aligns with Aon data at Figure 28 above reiterating the prominence of financial statement and tax claims.

Compared with last year’s data, the movement is evolutionary rather than dramatic. Warranties such as litigation, compliance with laws, and disclosure of information continue to show a steady increase of breach activity and a modest increase in their share of loss. Employment matters and several lower‑frequency lines remain smaller contributors in absolute terms, albeit with early signs of a more consistent pattern of loss emerging than was observable previously.

Stepping behind the data, our claims team is actively handling a number of material contract warranty breaches involving allegations of fraud and/or wilful misconduct, which are expected to resolve in 2026 with seven‑ or eight‑figure payments. Depending on how these matters crystallise, they may give rise to a more pronounced shift in the drivers of loss than is reflected in the current dataset.

We have examined these cases to identify any common themes or clear explanation for the apparent increase in this type of claim but have not, to date, observed any single, obvious trend. Our working hypothesis is that challenging macroeconomic conditions, coupled with uncertainty around tariffs and trading arrangements, have contributed to a more volatile environment for material contracts, in which late reductions or terminations can have a disproportionate impact on valuation.

Financial and tax‑related warranty breaches continue to drive claims, but the data is no longer as tightly concentrated, with other warranty categories beginning to feature more frequently.

Deal Size

In prior years, we observed that a significant share of initial claimed losses clustered in the £/$100–500m deal band. This year, a more granular cut of the data reveals an even tighter focal point: the £/$250–500m bracket.. For insurers, this coincides with one of the most competitively priced segments of the W&I market. It naturally prompts the question: why is this specific deal segment generating such a disproportionate volume of claimed loss?

One explanation may lie in the competitive dynamics around deals of this size. With premiums at or near historic lows for a sustained period, insurers have increasingly been compelled to compete on breadth of cover rather than rate alone, including the expansion of tipping, dropping, and nil retention structures. A combination of wider scope for claim and the absence of financial friction at the retention layer will inevitably be reflected in the claims data.

At the upper end of the spectrum, the increased notification activity on transactions above £/$1bn appears more straightforwardly a function of scale: the larger the enterprise, the greater the likelihood that an unknown pre-completion liability will crystallise into a meaningful loss. Anecdotally, our broking team observed more auction processes at this part of the market, squeezing timetables, limiting diligence, and increasing the competitive pressure on buyers to take a view on issues considered less material. That said, this is a risk characteristic that the insurance market has traditionally recognised and priced for, with structures and premiums calibrated to reflect that elevated baseline of exposure.

Claims Process

When considering the claims process itself (see Figure 37), insurers again put breach and loss at the heart of the matter, identifying inadequate information to assess breach and inadequate information to assess loss as the top two most frequent process challenges, with average rankings of 1.67 and 1.78, respectively (where a ranking of 1 represents the most commonly occurring issue).

Delays in providing information or responding to requests for information (RFIs) ranked as the third most frequently occurring process issue, indicating that insureds can sometimes contribute to the overall length of the claims timeline (although we likewise sometimes encounter insurers’ delay in responding to claims, raising overly detailed RFIs or the variation in claims handlers, and their subjectivity of review causing an overly extended claims timeline). By contrast, insureds’ handling of third-party demands and settlements ranked lower as a concern, suggesting insureds’ awareness of the need to involve insurers appropriately in third-party claims. General communication breakdowns also ranked relatively low, which is a positive signal that most stakeholders are approaching claims in a coordinated way; in our experience, a collaborative rather than adversarial approach is consistently more effective.

From an Aon perspective, we would always emphasise the value—where time permits—of a robust, detailed claim notice that clearly sets out the factual background, identifies the specific warranties breached and why these are breached, and, to the extent possible at the outset, outlines the loss which flows from those breaches. Careful early review of the policy (including the wordings of the warranties as covered and any exclusions that insurers may scrutinise) will result in a better-prepared notification and a smoother claims process. Aon is well placed to support insureds and their advisers in this exercise, and to anticipate the issues insurers may focus on in their evaluation.

In our experience of coverage issues, we see that the demonstration and quantification of loss is an area of increased focus, particularly where loss is based on diminution in share value. Insureds should expect that insurers will seek to understand contemporary evidence of the valuation methodology used at deal stage when assessing loss. Equally, insurers should give due weight to insureds’ evidence and insight on how the relevant issue would have been reflected in the pricing or transaction structure had it been known at the time, recognising the insured’s often deep understanding of its business and sector. Early engagement of financial experts can be highly effective in evidencing and substantiating the quantum of loss.

Claim Severity

APAC W&I claims have shown the potential to involve high-severity losses (loss in excess of $10 million), particularly on large-cap Australian and New Zealand deals ( enterprise values above USD 500 million), and on Indian and cross-border deals, where tax and transfer pricing exposures can crystallise several years post-completion.

Tax-driven and tax-adjacent losses (including customs, transfer pricing, and payroll/withholding issues) have also produced some of the largest individual payments in the APAC dataset.

Financial Statements

Across APAC, breaches of financial statements and management accounts representations are a leading driver of claim payments.

Common themes include: under-recognition of liabilities (such as prepaid customer credits, environmental, or lease-related obligations and employee-related accruals), overstatement of assets or revenue (such as aggressive revenue recognition practices, inventory issues, or incomplete impairment processes), and gaps between management accounts presented in diligence and underlying audit records.

Several large APAC claims have involved the discovery of financial issues that are recurring in nature or result in a diminution in value of the company, leading buyers to seek multiplied damages or other loss that is more than dollar-for-dollar.

This pattern aligns APAC with global trends in which financial statements claims represent a large share of paid loss. It also explains the increasing underwriting focus on revenue recognition policies, off-balance-sheet exposures, and the robustness of local audit standards and controls in less familiar jurisdictions.

Tax

Tax-related breaches and standalone tax liability policies feature prominently in APAC’s claims profile. Key themes include income tax and transfer pricing disputes (especially in Australia and India, with authorities scrutinising cross-border financing, related-party arrangements, and large corporate groups); customs and indirect tax exposures (such as mis-classified imports and VAT/GST issues); and withholding and payroll tax failures (including non-filing or late filing of PAYG or equivalent returns and associated penalties).

APAC has seen claims involving multi-year audit and reassessment processes, interest, and penalty components in addition to the underlying tax. Claims have also been made well into the back half of the policy period and, in some cases, near or after the expiry date of general warranties but within extended tax coverage periods. While in many cases the initial tax liability exposure appears to be significant, policyholders have often been successful in reducing the ultimate liability and resulting payment under the W&I or tax policy.

These patterns suggest that, in APAC, tax remains a low-frequency, high-potential risk, with a claim profile that is notably more long-tailed than general W&I coverage. For both W&I tax coverage and standalone tax liability insurance, this reinforces the importance of long claim reporting periods (often 7–10 years), careful pricing, and structuring of tax cover, particularly where cross-border or treaty-based positions are central to deal value. Moreover, it highlights the need to explicitly address interest, penalties, contest costs, and gross-up in policy wording.

Consumer and Retail

Prevalent issues centre around consumer protection, product and marketing compliance, and the treatment of customer-related liabilities. Claims often involve undisclosed complaint logs or regulatory correspondence, regulatory investigations by consumer protection agencies, and mis-statement of prepaid customer credits (for example, memberships or vouchers) and inventory exposures.

These trends underline the importance of careful review of complaints handling, marketing practices and the accounting for deferred revenue and prepaid balances.

Cross-Border Corporate and Financial Structures

Particularly for deals centred on Australia and India, the dominant themes are tax and regulatory in nature. Claims submitted under tax insurance policies frequently relate to transfer pricing and related-party financing arrangements, treaty-based capital gains positions, customs and indirect tax exposures, and the interaction of these risks with financial statements and disclosure warranties. These disputes often crystallise several years after completion and are a major driver of the long-tail, high-severity profile of tax and tax-adjacent claims in APAC.

Conclusion

The APAC claims data shows a market that is increasingly contributing its own distinct experience to the global transaction risk landscape. The claims experience on larger, tax-intensive and cross-border deals, coupled with an increasingly assertive regulatory environment, explains the growth in uptake of W&I insurance in APAC. It also demonstrates that W&I and tax insurance is effective in absorbing complex, systemic risks. Hence, the APAC transactional risk market is well placed to remain a stable, long-term feature of the regional M&A landscape.

For dealmakers, the message is two-fold: first, that well-structured insurance can and does protect value in the region. Second, outcomes are heavily influenced by sector-specific diligence, the quality of financial and tax workstreams, and the discipline of post-completion integration.