Warranty and indemnity insurance (W&I) has been a fixture of large-cap M&A for years, but a new report from Global Insurance Law Connect (GILC) finds it is no longer confined to the most sophisticated transactions. Drawing on analysis from member firms across 25 jurisdictions, the report concludes that W&I, tax and contingent risk cover, trade credit insurance, and insurance for fines and penalties are being pulled into the mainstream by commercial conditions rather than product innovation.
Competitive deal processes, rising insolvency risk, more active tax authorities and increasingly complex regulatory exposures are all creating demand for cover that can isolate defined liabilities and provide greater certainty. Across the jurisdictions surveyed, parties are increasingly turning to these products where traditional contractual tools fall short. Indemnities, escrows and seller liability caps are still widely used, but they do not always provide the flexibility or deal certainty that competitive transactions now require.
In the UK, W&I and related specialty products are described in the report as “widely available and well established”, with the London Market continuing to serve as a major centre for transactional risk underwriting. The growth question here is not about access to capacity but about breadth of application. Specifically, whether the product reaches the mid-market deals and clients who have historically defaulted to contractual protections because they were better understood.
“Brokers should educate mid-market dealmakers proactively, because those able to explain the practical mechanics of the product are likely to capture demand that would otherwise default to traditional indemnities and escrows,” said Matias Ponferrada, partner at Abeledo Gottheil in Argentina, in a comment that the report frames as applicable across markets at earlier stages of adoption. The same logic applies in more established markets where the mid-market remains underpenetrated relative to large-cap and private equity transactions.
The GILC report notes that in the UK, insurers generally expect the buyer to have investigated the business properly rather than treating the policy as a substitute for diligence. Gaps in preparation may lead to exclusions or further underwriting requirements.
“Known risks, forward-looking matters, underfunded pensions, transfer pricing, cyber incidents and environmental issues may be excluded or require separate cover,” said Dominik Skrobala, partner at gbf Attorneys-at-law in Switzerland. A broker who understands the underwriting process can help a client prepare for it, and the quality of that preparation directly affects the scope of cover that is ultimately available.
Beyond W&I, the report identifies tax liability and contingent risk insurance as a significant area of developing demand. Complexity is the common thread. More active tax authorities, cross-border restructurings, regulatory enforcement and the need to ring-fence liabilities that might otherwise require escrows, price reductions or deal restructuring are all generating interest in targeted cover.
Nathan Penny-Larter, partner at Beale & Co LLP in the UK, points to cyber security, data protection, intellectual property, ESG-related issues, employment practices and energy infrastructure as areas where demand for tailored solutions is growing.
Tax warranties are already the most frequent source of W&I claim notifications in several markets. In India, tax-related issues accounted for 50% of W&I claim notifications on Marsh-placed policies in 2025, according to Marsh’s Global Transactional Risk Insurance Claims Report 2026, a figure the GILC report cites as illustrative of how regulatory complexity is reshaping the claims environment.
The report notes that insurance for fines and penalties remains heavily constrained across most jurisdictions. Criminal, punitive and administrative sanctions are generally treated as uninsurable where cover would undermine the personal or deterrent function of the penalty, a position rooted in public policy rather than market appetite.
What can be insured, across most jurisdictions, are defence costs and compensatory consequences. Global W&I notifications rose approximately 35% year on year in 2025, with the UK recording a 150% surge according to the Marsh study, but claims exceeding US$20 million represented less than 8% of paid claims while accounting for approximately 43% of total payout dollars. That severity pattern makes underwriting discipline and diligence quality more consequential.
Trade credit insurance sits separately from the transactional risk products and is shaped by different conditions. Allianz Trade’s April 2026 Insolvency Report projects 26,550 UK business insolvencies in 2026, approximately 30% above 2019 levels. GILC identifies economic uncertainty, supply-chain disruption and geopolitical instability as reinforcing demand for cover that protects cashflow and supports financing when counterparties become unreliable.
The GILC report’s message to brokers is consistent across jurisdictions: the product works best when it is considered early, rather than retrofitted. In the UK mid-market, where adoption still trails the large-cap and private equity segments, the opportunity lies in reaching deal teams before the transaction architecture is set, when the scope of cover can still be built into the structure rather than negotiated around it.
