W&I insurance claims rise for small deals across Pacific region
The study found that warranty and indemnity (W&I) insurance claims are occurring at a high frequency across Australia and New Zealand, especially for smaller transactions.
According to Aon's data, claims were filed on approximately 20 percent of W&I policies in the Pacific. Eighty percent of these claims originated from deals with an enterprise value of less than AUD $500 million (approximately NZD $545 million).
This concentration of claims among small-to-mid-market transactions highlights the importance placed on W&I insurance to protect deal value. Many businesses in the region rely on these policies to transfer risk and safeguard their financial interests during acquisitions and mergers.
Claims profile
The main causes of W&I insurance claims in New Zealand, according to the report, were compliance breaches, tax concerns, and issues related to the adequacy of financial statements. Breaches involving inadequate disclosure, either in relation to general warranties or specific representations, have remained a recurring problem. Due diligence processes, the report suggests, may require further strengthening to prevent these issues from leading to claims.
Aon noted that a significant number of claims are reported soon after a deal closes.
Nearly 25 percent of claims in the Pacific region occur within six months of completion, and almost 50 percent are made within 12 months. The vast majority - close to 100 percent - of claims are submitted within three years, which reflects the typical term of W&I policy periods.
Within the past 12 months, Aon's clients in the Pacific region have received approximately AUD $30 million in paid out M&A insurance claims. The data indicates that nearly 60 percent of claim notices submitted by clients resulted in successful claim payouts.
Regional observations
Adrienne Booth has recently been appointed as Executive Director, Transaction Solutions, New Zealand at Aon. She noted that the nature of risk management via W&I insurance has become considerably more sophisticated: "We're seeing a more sophisticated approach to risk transfer in the region. Buyers and sellers alike are leveraging W&I insurance not just as a deal enabler, but as a strategic tool to manage post-close risk. The data reinforces that this product is delivering real value when it matters most."
Booth, who brings global experience from her previous legal and compliance roles within Aon internationally, has returned to her native New Zealand to oversee the company's transaction solutions offerings there. Her appointment signals an increased focus on expanding these services and supporting M&A activity across New Zealand.
Ami Kalmath, Claims Manager, Financial Specialties and Transaction Solutions, Pacific at Aon, emphasised the critical role played by specialist claims support in achieving favourable outcomes for clients: "The Pacific region continues to demonstrate the value of W&I insurance evidenced by the one-in-five frequency of claim notifications and the global figures for claim payouts. Aon's specialist claims team can assist clients to achieve optimal recovery on losses through specialist claims advocacy. Our experience demonstrates that when clients engage early and collaborate closely with their advisors and insurers, claims are resolved more efficiently and with better outcomes."
The study's findings align with broader global figures on the frequency and success rate of claim notifications and payouts, according to Aon's analysis of proprietary claims records and insurer surveys.
Market outlook
Increased deal activity across the Pacific region has also led to a steady rise in the number of claims being notified, reinforcing the pattern of high W&I claim volumes in the small to mid-market segment. According to Aon, disclosure-related breaches remain the most common triggers for claims, alongside compliance and tax matters.
The timing and pattern of claims, with the majority reported within a year of deal completion, underline the importance of active monitoring and swift engagement with claims teams.
The data also points to the need for continued diligence in pre-transaction processes and ongoing collaboration among all parties involved in the deal lifecycle.
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