The frequency of M&A insurance claims is rising as large deals prove risky and the average payout on the most severe category of claims tops $20 million, according to AIG’s latest study of its Warranty & Indemnity claims.
The study, now in its second year, examined policy years 2011 to 2015. This year, we looked into claims severity for the first time, revealing that more than half of all material claims (those incurring more than $100,000) during the period were $1 million or more.
“The bigger and more complicated a deal is, the more likely there is an unknown liability lingering. We are paying sizeable claims, sometimes writing eight-figure checks in different geographies.”