Representations and warranties insurance (RWI) paid out almost $1.7 billion in claims over the past decade, but the direction of travel within that number is what is reshaping how the product gets placed and structured. According to Euclid Transactional’s 2026 Global RWI Claims Study, payments of $20 million or more accounted for 54% of all loss paid in the most recent 12-month period covered by the study, up from 40% in prior years. The number of such payments nearly doubled, rising from six to 11 in a single year.
Nearly 90% of Euclid’s total loss paid over its 10-year history arises from claims exceeding 1% of enterprise value (EV), and over 70% from claims exceeding 2.5% of EV. Buying down to capture small claims leaves the bulk of real exposure only partly covered. The study argues the math favours accepting a higher retention in exchange for limits that respond when a large claim actually arrives. The study argues the math often favors accepting a higher retention in exchange for additional limits that respond more fully when a large claim arrives.
Financial statements and customer and contract claims drove 71% of loss paid in the most recent period, broadly consistent with the 69% historical average. Revenue recognition issues alone account for 39% of financial statements loss paid, reflecting revenue’s central role in how most deals are valued. The study also notes that percentage-of-completion accounting, relevant in only a fraction of transactions, accounts disproportionately for more than 30% of revenue recognition loss paid.
The severity trend does not exist in isolation. It developed against a backdrop of sustained rate pressure that, by Euclid’s assessment, left the North American RWI market pricing below what was needed to pay claims profitably on policies underwritten in 2023 and 2024.
According to the study, North American primary rates fell from a quarterly high of 5.73% of EV in Q1 2022 to 2.65% in Q2 2024. That decline was driven more by the gap between available carrier bandwidth and depressed deal volumes than by any underlying improvement in risk. That pricing dynamic drew in capacity that, in some cases, lacked the historical claims data to set rates on a sound actuarial basis.
Marsh’s 2025 Global Transactional Risk Insurance Report found that average primary R&W premium rates in North America rose 16% in 2025, reversing a 14% decline the year before. Euclid frames this as a necessary correction, and one that it expects to become more data-driven over time as the industry accumulates a critical mass of claims experience. The goal is pricing that reflects actual loss potential rather than how busy underwriters happen to be, according to the study.
Several carriers have exited the market since the 2023-2024 under-pricing period, meaning the carrier that priced and bound a policy may not be the one that pays the claim. Euclid’s study noted that timely resolution depends substantially on whether the primary insurer controls the claims process. On first-party claims where Euclid was primary, payments were made 40% faster than in cases where another party led the investigation.
The study found that over 73% of Euclid’s claim notices were resolved within 12 months, rising to more than 92% within 24 months, rising to more than 92% within 24 months. For financial statements and customer and contract claims, the two most complex and material claim types, more than 72% of loss paid on cases where Euclid was primary were resolved within 12 months of the claimant’s initial document production.
EMEA claim notices grew from 20 in 2019 to 222 in the latest period, with loss paid up 59% year-over-year. The study acknowledges the EMEA claims landscape looks challenging for 2023 and 2024 vintages, though not yet as severe as in North America.
The claim distribution in EMEA also differs structurally. Tax warranty claims are the most frequent notice type but account for only 8% of loss paid. Financial statements claims comprise just 13% of notices yet account for 58% of EMEA loss paid. That gap between claim volume and severity across jurisdictions is widening.
