New Heights for M&A Insurance Claims Payouts

An analysis of mergers and acquisitions claims payouts from Aon shows more than $300 million representations and warranties claims were paid in 2024, the highest recorded in a single year.

Aon plc on Tuesday released the latest edition of its Global Transaction Solutions Claims Study.

The study shows there has been a significant increase in claims activity around representations and warranties, with 2024 being the highest year on record for M&A insurance payouts.

Notable trends in the Aon study include:

• The severity of claims is rising, with more “greater-than-dollar-for-dollar” claims.
• Multiplied damages claims are becoming more frequent.
• Smaller deals under $500 million continue to dominate claim frequency, but larger deals show higher relative severity.

In North America, R&W claims were driven by alleged breaches of warranties relating to compliance with laws (20%), followed by tax (17%) and material contracts (13%), according to the study.

Activity in the Europe, the Middle East and Africa continues to increase year-on-year, with claims notifications up by 26% in 2024.

In the Asia-Pacific region, a key trend include an increasing variety of categories of R&W breaches being claimed in Asia, including an increasing proportion of regulatory, litigation-related and disclosure-related claims, the study shows.