Michael Lock | Executive Director | M&A and Transaction Solutions | Aon South Africa | mail me |
For buyers and sellers, closing a Merger and Acquisition (M&A) transaction can feel like the finish line. However, when Warranty and Indemnity (W&I) insurance forms part of the transaction, the real test of that protection may only come after the deal has closed.
Our 2026 Transaction Solutions Global Claims Study points to a significant evolution in the W&I claims environment. Claims are becoming more frequent, arriving earlier in the policy lifecycle and spanning a broader range of circumstances. The study examines the current M&A deal environment, the catalysts and impacts of significant claim payments, and the increase in claim notifications around the globe.
A changing claims landscape
For businesses and investors active in Africa and Southern Africa, these trends highlight an increasingly important consideration. Having W&I cover in place is only one part of the risk management equation. Understanding when and how that cover comes into play when a problem emerges is just as important.
The growth in claims activity is one of the clearest signals from the study:
- In 2025, notifications submitted under W&I policies placed by Aon increased by 47% compared with 2024. Meanwhile, projected ultimate claim frequency for the 2025 underwriting year is expected to exceed the long-standing 20% benchmark. Aon also reports that clients recovered more than $60 million on transaction solution claims in 2025.
- Claims are also appearing earlier. Of the W&I policies we placed in 2025, 9.5% had received a claim notification by the end of that year. More recent policy years are tracking above historical experience. This points to a shift towards earlier engagement with the claims process.
This does not necessarily mean that W&I insurance is failing to perform as intended. In fact, it may demonstrate the increasing sophistication of the market. As buyers, sellers and their advisers become more familiar with W&I, they are becoming better equipped to recognise potential breaches, understand the policy response and notify claims earlier. In other words, greater claims activity can also reflect a more mature understanding of the protection that has been purchased.
The growing maturity of M&A claims provides important context for this shift. Greater familiarity with W&I can help transaction participants recognise potential breaches sooner. It can also encourage earlier engagement with insurers and advisers.
For African markets, where transaction structures and the use of W&I insurance continue to evolve, this distinction matters. The question is not simply whether claims will arise. Instead, businesses must consider whether they are prepared to manage claims effectively when they do.
Claims are becoming broader and more complex
The nature of claims is evolving alongside their frequency. Financial statements and tax warranties continue to feature prominently. Financial statements, material contracts and compliance with laws rank among the leading breach types by paid loss. At the same time, other areas, including litigation, disclosure and employment-related matters, are beginning to feature more consistently.
Movement is occurring at both ends of the severity spectrum. We are seeing an increasing number of larger, more complex matters, including initial notifications involving claimed losses of eight figures or more. At the same time, lower retentions mean that smaller matters are increasingly entering the claims process.
Average retentions declined from 0.71% in 2021 to 0.27% in 2025. This excludes policies with nil retentions. For insureds, this creates a more nuanced claims environment. A claim does not have to become a catastrophic event to warrant attention.
Conversely, a high-value claim may involve significant complexity. Insureds may need to prove both the breach and the resulting financial loss. That is where the quality of the claims process becomes critical.
The growing maturity of M&A claims also means businesses must prepare for a wider range of potential disputes. They need to understand that smaller claims can matter, while larger claims may require substantial evidence and analysis.
Having a policy is not the same as having a claim
One of the most important messages emerging from Aon’s study is that W&I claims do not simply involve identifying something that went wrong and expecting the insurer to pay. The insured still needs to demonstrate the breach, establish causation and substantiate the resulting loss.
Insurers surveyed for the study identified establishing a breach of warranty and quantifying the loss as the two most frequently encountered coverage issues. Within the claims process itself, insurers ranked inadequate information to assess the breach and inadequate information to assess the loss as the most common challenges.
This is particularly important when a loss is complex or involves a reduction in the value of a business. Quantifying such a loss may require financial analysis, expert evidence and a clear understanding of the valuation methodology used when the transaction was originally completed.
A large number attached to a claim does not, by itself, establish the amount that an insurer will ultimately pay. The strength of the evidence supporting that number matters. Therefore, having a policy does not automatically guarantee a straightforward claims outcome. Insureds must support their claims with evidence that establishes the breach, causation and resulting loss.
The role of the broker is critical
The value of an experienced broker does not end when the transaction closes. In fact, when a potential breach emerges, the broker can become an important link between the insured, its advisers and the insurer. The broker can help turn a potentially complicated situation into a structured claims process.
That starts with understanding the policy. The wording of the W&I policy, including the specific warranties covered, exclusions and other policy provisions, needs to be considered alongside the underlying transaction documents. A strong claim notification should clearly explain the factual background, identify the relevant warranty and set out why it is believed to have been breached. Where possible, it should also explain the loss flowing from that breach.
An experienced broker can help the insured anticipate the questions an insurer is likely to ask. The broker can also identify gaps in the evidence and bring the appropriate legal or financial expertise into the process early. This can prove particularly valuable in complex African transactions.
A deal may span multiple jurisdictions, regulatory environments, currencies and legal frameworks. The ability to understand the transaction in its broader commercial context can help avoid unnecessary delays and uncertainty. At the same time, the broker must navigate the requirements of the policy.
Claims management should start before a claim exists
The study’s findings also reinforce a broader lesson for dealmakers. Claims management should not become an afterthought. The foundations for a successful claim often emerge much earlier. These foundations develop during due diligence, policy placement and transaction negotiations.
A clear understanding of the risks identified during diligence, the warranties ultimately provided, the scope of the W&I policy and any negotiated exclusions can make it significantly easier to assess a potential claim later. It is also important to preserve relevant documentation and evidence. Once a transaction has closed and a business is operating under new ownership, reconstructing the circumstances surrounding an issue months or years later can be challenging.
Early engagement matters too. Our experience shows that claims are increasingly being notified earlier in the policy period. For an insured, this makes having a broker who understands both the transaction and the policy particularly valuable.
The growing maturity of M&A claims reinforces the need for this preparation. As claims emerge earlier and cover a broader range of circumstances, dealmakers cannot treat claims management as something that begins only after a dispute arises.
A more strategic role for risk advisers
As M&A activity across Africa develops and W&I becomes a more established component of transaction risk management, the role of the broker is evolving.
It is no longer simply about finding capacity and negotiating the most attractive policy terms. It is about helping clients understand how the protection they have purchased is expected to work in an environment where claims are becoming more frequent, earlier and more diverse.
For businesses and investors entering the African M&A market, the lesson is straightforward. The value of W&I insurance should not rest only on the policy obtained at completion. It should also reflect the quality of support and advice available if and when businesses call upon that policy.
While the deal may be done, the risk does not necessarily end there. And when it doesn’t, having the right broker beside you can make all the difference between simply having insurance and being able to use it effectively.
