Last week, insurance giant Aon announced the launch of a new warranty and indemnity product aimed specifically at the real estate sector – now, a senior figure within the firm has opened up about what that offering means for brokers and their clients.
Speaking to Insurance Business, Sam Thomas – head of M&A and transaction solutions – said the new solution aims to address the fact that risks in real estate transactions are distinct from other transactions so they require a fundamentally different approach.
“Our goal is for the W&I insurance policy to go ‘back to back’ with the underlying purchase agreement,” said Thomas. “Aon can structure a solution whereby it is able to leverage cost efficiencies to structure a W&I insurance program for the entire portfolio.”
Announced to the market on Monday, April 29, Thomas says the new solution has been designed specifically for real estate transactions to benefit both buyers and sellers.
“The key features of this product will enable sellers to achieve a clean exit from real estate investments, while at the same time providing buyers with customary deal protection,” he told Insurance Business.
Thomas also noted that there has been increased use of W&I insurance in real estate deals in recent years, which has widened its exposure to a range of interested parties – including Asia-Pacific corporates, RE funds and sovereign wealth funds.
“We have seen several sophisticated sellers go to market with a portfolio of assets so as to leverage market pricing,” he said.
Looking ahead, Thomas said he expects that W&I insurance will become increasingly popular in the real estate sector and beyond.
“The awareness of such a product by real estate investors will result in increased uptake and is set to become an accepted feature of the deal landscape,” he said.