Lockton’s experienced transactional risks team specialise in sourcing effective warranty and indemnity cover and risk solutions to protect your business throughout the transaction process. We work for buyers and sellers in corporate transactions, as well as for the firms that advise them. Harnessing decades of experience and strong insurer relationships, we’ll make sure you get the cover you need to make your deal happen, and to protect your interests in the future.
Protecting you, now and always
Lockton's experienced transactional risks team specializes in providing a broad suite of solutions designed to protect businesses throughout the transaction lifecycle.
Transactional risks encompass potential financial losses that may arise from various issues within a deal, including but not limited to breaches of contract, inaccuracies in financial statements, and other seen/unforeseen liabilities. By mitigating these risks, sellers can limit their exposure and ensure a smoother exit, while buyers can enhance the attractiveness of their offers and secure the long-term value of their investment.
We serve buyers, sellers, and their advisors in corporate transactions. Leveraging extensive experience and strong insurer relationships, we ensure clients obtain the necessary coverage to complete deals and protect their future interests
Our Value Proposition
Warranty Liability Transfer: We transfer warranty liabilities to insurers through back-to-back coverage. We obtain coverage for unknown risks post due diligence, including tax, legal, and pension contingencies.
Specialized Expertise: Our global team comprises corporate lawyers, underwriters, and brokers with specialized knowledge in transactional risk insurance.
Detailed Risk Analysis: We provide scrutiny and detailed analysis of your deal to enhance your understanding of the associated risks.
Agreement Structuring Advice: We advise on optimal agreement structuring to improve its acceptability to insurers.
Creative Coverage Solutions: We employ a creative approach to address coverage gaps, identify complex risks, and access unconventional insurance markets.
Holistic Risk Perspective: We offer a broader perspective that extends beyond the deal, helping you understand ongoing operational risks and the full spectrum of your corporate risk.
Comprehensive Risk Coverage: We provide cover for known liabilities, as well as contingent risk insurance.
Advice on how best to structure your agreement to make it more acceptable to insurers
A creative approach to plugging any gaps in coverage, identifying complex risks and helping you access even unconventional insurance markets
A broader perspective that looks past the deal itself, helping you understand your ongoing operational risks and the full spectrum of your corporate risk
Cover for any known liabilities, as well as contingent risk insurance
Our services
W&I insurance
Tax insurance a few listed below
56 (2) (x)- Taxation of gifts and property
Depreciation of Intangibles
Indirect Transfer of shares
Business Income vs Capital Gains
Transfer price Risk
Valuation Risk
Withholding tax Issues
Contingent insurance
Due diligence
Litigation buyout
“The Lockton team are my first port of call when a transaction requires a W&I element. They provide timely and efficient solutions and display a deep, entrenched knowledge of the market. I would have no hesitation in recommending Lockton to my clients"
Contact our Experts
Anand Kaul
Managing Director, Transactional Lines
Anand.kaul@lockton.com
Neelam Koyande
Director, Transactional Lines
Neelam.Koyande@lockton.com
Get in touch
Warranty and Indemnity Insurance FAQs
What is W&I insurance?
Warranty and indemnity insurance (W&I) covers the unknown risks in an M&A deal – protecting buyers and sellers against financial losses.
What does it cover? A W&I policy will cover the insured for:
Breach of warranties
A claim under a tax indemnity
A claim under a general indemnity for breach of warranty
What does it not cover? The policy will not however cover an organisation for losses arising from: General exclusions
Known risks / issues known to the buyer
Disclosed matters – including UK/Europe general disclosure (data room, DD reports, specific disclosures) and US disclosure (specific disclosure schedules)
Fraud
Specific indemnities
Forward-looking statements
Purchase price adjustments (e.g., leakage/completion accounts)
Anti-bribery and corruption (depending on jurisdiction)
Ongoing construction matters
Professional negligence/errors and omissions
Pension underfunding
High risk areas where other lines of insurance would be more appropriate for e.g., environmental, and cyber
General tax exclusions
Secondary tax liabilities
Transfer pricing
Valuation of tax assets
How is the risk/policy premium calculated?
The risk premium on a transaction is normally calculated at 0.6% to 2% of policy limit dependant on size, jurisdiction and sector of the transaction.
How long is a typical policy period for?
A standard policy period in the insurance market can last between two and three years for general warranties, and up to seven years for fundamental and tax warranties.
How often are W&I insurance claims paid out?
Claims are always paid out if they meet the conditions for constituting a valid claim. Among other things the following are preliminary conditions that must be met to constitute a valid claim:
Is the claim in line with the W&I Policy terms? i.e. the notification ought to be made within the policy period
Confirm that the claim does not fall within any possible general exclusions or specific exclusions that had been agreed upon
Make sure that the breach was not disclosed against in either the disclosure letter, the data room or the seller / buyer DD reports.
However, many policies are subject to arbitration clauses and are subject to confidential terms and so results are not often made public.
What are the most common types of claims notifications?
In our experience, the most common claims we receive in Europe are tax, financial statements, litigation, permits, licenses, consents, material contracts and compliance with laws.
We particularly see tax claims in the technology, media and telecommunications (TMT) sectors, where fast growing businesses have failed to keep up with the tax regimes.
What makes you choose an insurer over another?
When choosing an insurer, we take 3 key things into consideration:
Premium level
Coverage capabilities
Claims handling