Warranty and indemnity (W&I) insurance has paid out more than it can sustainably afford. That is the central tension running through Euclid Transactional’s fourth annual Global W&I Claims Study, which analyses nearly a decade of claims data and finds a market that is growing in volume while struggling to price that growth correctly.
Euclid Transactional, a managing general agent specialising in transactional liability insurance and headquartered in New York, reported that its carriers have paid US$1.686 billion in claims across 8,502 transactions since the firm’s founding in 2016. The most recent 12-month period captured by the study saw 255 claim payments totalling US$518 million, a 44% increase in aggregate loss paid compared with the prior period.
Payments of US$20 million or more accounted for 54% of all loss paid in the latest period, up from 40% in prior years. Euclid made 11 such payments in the trailing 12 months, compared with six in the previous year. On smaller deals, those with an enterprise value below $250 million, payments of 75% or more of the policy limit accounted for nearly half of loss paid in that deal band, pointing to material losses well below the threshold that would technically qualify as severe.
Severity alone does not fully explain the market’s difficulties. Pricing did. North American representations and warranties insurance (RWI) rates fell from a quarterly high of 5.73% in the first quarter of 2022 to 2.65% by mid-2024, according to the study. In EMEA, rates declined from 2.11% in the third quarter of 2022 to 1.46% in the third quarter of 2024. During the same period, average retentions continued to fall.
Policies written in 2023 and 2024 are expected to be unprofitable in North America. The EMEA picture is improving from a rate perspective, but the study notes it remains challenging for those years. Several carriers have already exited. Nexus Underwriting withdrew from W&I in October 2024, and broader market consolidation has followed.
New entrants are circling, drawn by expectations of higher M&A deal volumes. The study’s authors argue the industry’s next decade will be defined by fewer underwriters with greater scale and better data, rather than a return to the crowded soft market of the mid-2020s.
The correction is already under way. Rates have risen from their 2024 lows, and the study argues that sustainable pricing should track the risk profile of individual deals rather than the volume of work available to underwriters.
Claim notices in the region grew from 20 in 2019 to 222 in the most recent 12-month period covered by the study. Loss paid in EMEA rose 59% compared with the prior year. That growth reflects both increased product penetration and the maturing claims tail on deals done during the surge years of 2020 to 2022.
The broader market picture is consistent with findings reported by the International Underwriting Association in October 2026, which identified concentration in large losses and falling retentions as the structural factors most likely to constrain the market’s long-term profitability. The Euclid study makes the same argument from a first-party data set: nearly 90% of its loss paid arises from claims exceeding 1% of enterprise value, with over 70% from claims exceeding 2.5%. Low retentions may widen access to the product, but they draw limited premium in exchange for exposure that concentrates in exactly those larger, policy-limit-adjacent losses.
The study also notes a clear distinction between claim frequency and claim severity in EMEA. Tax warranty breaches are the most commonly notified claim type in the region, but they account for only 8% of total loss paid. Financial statements claims, by contrast, represent 13% of notices while driving 58% of total EMEA loss paid. That gap shapes how claims teams allocate resource and triage incoming notices.
Resolution speed is another variable with structural consequences. Euclid found that more than 73% of all claim notices were resolved within 12 months of receipt. Where the firm acted as primary insurer and controlled the claims process, first-party claims that resulted in payment were settled 40% faster than those where another carrier led the investigation.
That dynamic is relevant as W&I continues to move into the mid-market, where deal parties are less experienced with the product and the quality of the claims process can affect whether a settlement is reached efficiently or drags into costly dispute.
The study’s closing message is plainly directed at the industry rather than at policyholders, but its implications flow in both directions. The combination of pricing, retentions, and coverage terms that defined 2023 and 2024 was not sufficient to sustain the market. Getting that balance right in the next cycle is not just a carrier problem. A thinner, more disciplined field of underwriters changes the options available at placement, and the terms on which W&I can be structured for deal clients.
