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Aon’s Global Transaction Solutions Claims Study Shows Insurers' Claim Handling Performance Emerges as Key Market Differentiator

Latest findings from Aon and Mergermarket reveal that Aon clients continue to achieve fitting and successful outcomes in the claims process

DUBLIN, May 22, 2024Aon plc (NYSE: AON), a leading global professional services firm, and Mergermarket, an esteemed provider of intelligence, data, and analysis on global M&A activities, today unveiled the latest edition of their Global Transaction Solutions Claims Study. The ongoing surge in the utilization of Representations and Warranties (R&W), also known as Warranty and Indemnity (W&I) insurance, has spurred a heightened emphasis on claims activity, which has fostered increased global collaboration to address claims issues and facilitate resolution.

Key highlights from the report include:

  • While the M&A market and R&W policy placement slowed globally in 2023, claims activity remained steady, with Aon clients submitting more than 140 new R&W claims last year.
  • This brings the total number of claims that Aon clients have filed on policies placed in North America to more than 950 through 2023. Of those claims, 39 percent have settled within the policy’s retention, 17 percent resulted in payment by the insurer, 24 percent remain active, 16 percent are inactive and 4 percent have been denied.
  • Through the end of 2023, R&W insurers have paid more than $1b to Aon clients in North America and recognized more than $1.5b in total loss (including retention amounts). More than $550m of this amount has been paid in the last three years.
  • More than $300m has been paid to Aon clients in North America on claims filed more than 12 months post-close of the transaction.
  • To date, insurers have paid over $120m to Aon clients on W&I and tax claims in EMEA, with over $20m paid since the last publication.
  • Australia and New Zealand continue to see claims notified on an average of one in five W&I policies placed in this region from 2012 onward.

The competitive landscape of the transaction solutions insurance market in 2023 favored insured parties, characterized by reduced pricing and an expanded scope of coverage. Meanwhile, the performance of insurers in handling claims has emerged as a pivotal factor, distinguishing leaders in the market.

Clients who recurrently engage transaction solutions products are shifting their focus beyond pricing considerations. They now seek assurance that insurers are administering a fair, efficient, and timely claims process. Consequently, there is a growing imperative to comprehend the dynamics surrounding R&W, W&I and tax insurance claims. This entails discerning key trends, identifying loss drivers, and recognizing influential risk factors on a global scale. This year's claim study not only encompasses North America but also features more extensive data on the status of R&W and W&I claims across diverse regions worldwide.

"Gaining insight into global M&A insurance claims activity is crucial for our clients to manage risks effectively and help our clients make better decisions. This study highlights that while clients rely on policies to safeguard their investments, a collaborative approach among stakeholders is essential for a smooth claims process. More often than not, when we see that collaborative approach, we see positive and appropriate resolutions for Aon clients,” said Stephen Davidson, head of claims for Transaction Solutions at Aon.

In 2023, Aon helped its clients navigate over 150 new claims in North America and 48 new claims in the Europe, Middle East, and Africa (EMEA) region. In Australia and New Zealand, the transaction liability market remains steady with consistent historical claim rates of nearly 1-in-5 policies. In addition, there continues to be growth across the emerging markets of Southeast Asia.

Building upon previous studies, the insurer survey now includes respondents from both North America and EMEA to provide insights into their claims experiences and to incorporate them into the findings. This year, 18 insurers participated in Aon’s North American Transaction Solutions Insurer Survey and 14 insurers participated in Aon’s EMEA Transaction Solutions Insurer Survey, enhancing the firm’s view of claim performance and trends in the transaction solutions market.  

"The complexities of M&A insurance claims underscore the importance of stakeholder engagement in ensuring a seamless claims experience. At Aon, we consistently strive for favourable resolutions, reflecting our commitment to client satisfaction," said Claire Fleetwood, senior claims advocate in M&A and Transaction Solutions at Aon.

One notable highlight since last year’s publication is that Aon Transaction Solutions clients have now recovered more than $1 billion in claim payments in North America. Moreover, 2023 saw Aon assist its clients in resolving the highest-ever number of claims resulting in payment and helped its clients secure nearly $250 million in loss paid in North America, as well as nearly another $50 million in EMEA and APAC.

“As the transaction solutions market matures, sophisticated purchasers are continually gaining more insight into claims handling across the industry. Clients are no longer just looking for the policies to provide them solutions on the front end of a deal, but to deliver meaningful recovery when their investments suffer a legitimate loss post-close resulting from a breach of the transaction agreement.” said Anthony Dragone, Senior Vice President Claims Team, M&A and Transaction Solutions, Aon.

Read the Full Report here.

Aon’s M&A and Transaction Solutions is a leading M&A insurance advisor and innovator of solutions and services that help secure investments, maximize deal value and drive transaction success by solving wide-ranging risk issues facing dealmakers throughout the deal lifecycle.

Solutions and services include transactional insurance instruments such as representations and warranties or warranty and indemnity insurance and tax and litigation insurance; and specialized due diligence, including people and human capital, insurance, cyber, and intellectual property.

Working across industries and covering more than 35 countries, Aon’s highly experienced [Transaction Solutions?] teams use proprietary industry data and insights drawn from the more than 4,000 global deals supported annually.  

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries and sovereignties with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.

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