Protect your business from decisions yet to be made, with a litigation risk policy designed by the industry’s foremost legal experts
Protect your deal from identified risks
Contingent and Litigation Risk Insurance protects insureds from identified risks where the loss crystalises on the basis of a legal, regulatory or administrative decision. Our Private Equity and Corporate Acquisitions Practice (PECAP) recruits highly skilled legal experts to devise policies that make known risks the insurer’s problem, not the buyer's or the seller’s.
What contingent risks can I insure?
Contingent and Litigation Risk Insurance covers known risks, typically future legal or regulatory decisions. Examples include: (i) prospective or ongoing legal proceedings; (ii) contractual interpretation issues; (iii) complex ownership/title risks; and (iv) regulatory decisions or challenges. Theoretically, any risk is insurable if there is a good defensible position that the risk will not crystallise.
Our industry leading offering:
Market Leading Experience
Our team consists of former litigators from leading international firms, boasting extensive experience in litigation and contingent risk. This allows us to deliver tailored solutions for your specific needs, exceeding the boundaries of a traditional brokerage. Drawing upon our profound understanding of legal complexities and the insurance landscape, we consistently develop market-first solutions and insurance innovations for our clients.
Value Creation
We consider Contingent and Litigation Risk Insurance to be a value creation tool, and not simply about risk transfer. Through close collaboration, we partner with our clients to pinpoint where such risks hinder business efficiency or detract from transactional value. Our bespoke insurance policies create significant value for our clients and their businesses.
Client Focused Advice
We take pride in delivering high-quality, client-centric insurance solutions. Drawing upon our unique position and resources as the world's largest privately owned broker, our highly specialised teams collaborate seamlessly to provide comprehensive and long-term risk management strategies that align with our clients’ needs.
Read our latest insights on Contingent Risk
Contingent and Litigation Risk Insurance FAQs
What is Contingent and Litigation Risk Insurance?
Contingent and Litigation Risk Insurance provides for identified issues not covered by other types of insurance. Contingent risk policies will typically cover future legal or regulatory decisions, such as a court judgment or regulatory order, that would cause a loss to the insured party if the decision falls adverse to the insured party’s interest. In an M&A transaction the risks are typically identified as part of transaction diligence. Risks can also be identified in a restructuring, corporate reorganisation or where a company is involved in litigation, or at other times in the business cycle. To be insurable, an insurer will need to be able to underwrite the likelihood of the risk occurring using objective expert/legal analysis. Contingent and Litigation Risk Insurance is predominately used to provide cover for low probability but high severity/quantum events, which in the absence of insurance would be damaging to the insured or its investments.
What is the difference between Contingent and Litigation Risk Insurance and Warranty and Indemnity Insurance (W&I) Insurance?
Contingent and Litigation Risk Insurance covers identified risks, whereas W&I covers unknown risks. Contingent Risk and Litigation Insurance will be used to cover risks that falls outside of W&I and tax cover.
How much does Contingent and Litigation Risk Insurance cost?
Pricing for each policy will be established in underwriting, with the cost a reflection of the risk and complexity of each case. We have typically seen pricing range from 1.5% of the limit insured, to 17.5%.
What’s the difference between Contingent and Litigation Risk Insurance and After the Event Insurance (ATE)?
Contingent and Litigation Risk Insurance is used to cover losses arising from any legal, litigation and regulatory risks, including damages awards, wasted deal costs, and diminution in investment value. ATE is limited to losses arising out of adverse cost orders in a litigation or arbitration.
When can Contingent and Litigation Risk Insurance be used?
Contingent and Litigation Risk Insurance can be used for:
Legal interpretation risk
Pension associated risks
Shareholder disputes
Specific accounting treatment
Environmental risks
Regulatory exposures
Litigation
Shareholder disputes
Transfer of Undertakings (Protection of Employment) (TUPE)
Liquidation insurance/successor liability
Legal interpretation risk for identified litigation/arbitration (particularly appeal risks of favourable first-instance decisions)
Intellectual property or employment disputes
Specific accounting treatment
Contingent environmental risks
Other regulatory exposures
Complex title risks
Pensions
Environmental
Litigation/matters under appeal
TUPE/Employees
Contractual liabilities
Transactions where the parties cannot agree on who should bear a specific legal risk identified in due diligence
On the sell side, preventing a known issue being used in pricing negotiations, or causing delays in a sale process
Providing a competitive advantage to a buyer, as they will not need a reduction in price, or escrow, for an identified specific legal issue
Where a client wishes to minimise their exposure in a situation of a worst case judgment or determination
Removing uncertainty from a restructuring, reorganisation or refinancing
Insolvency situations; and
Enabling funds to be liquidated and proceeds returned to investors.
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