TLDR: Warranty and indemnity insurance has become the default mechanism for clean exits in European mid-market M&A, and rising premiums won’t reverse that shift because escrow-based alternatives cost sellers more than the insurance itself.
Warranty and indemnity insurance shifts the warranty risk to a balance sheet built for it
A share purchase agreement allocates risk through warranties: statements the seller makes about the target’s accounts, contracts, tax position and compliance. If a warranty turns out to be false, the buyer has a claim. Warranty and indemnity (W&I) insurance moves that claim off the seller’s balance sheet and onto an insurer’s. The policy can sit on either side of the transaction: under a buy-side structure, the purchaser claims directly against the insurer rather than pursuing the seller through the transaction documents, while a sell-side policy backs the seller’s own liability under the warranties it gave. Buy-side is now the standard structure in almost every European auction process, and most policies written today are non-recourse: the insurer waives its right to seek reimbursement from the seller except in cases of fraud.
That structural detail matters more than it sounds. Once a policy is non-recourse, the seller’s exposure to the deal effectively ends at completion. The buyer still has full recourse, just against a rated insurer instead of a counterparty who may have redeployed the proceeds, wound up the selling entity, or moved on entirely.
Private equity sellers use W&I insurance to distribute proceeds the day the deal closes
For a private equity (PE) sponsor, the appeal is arithmetic as much as legal. A traditional escrow or holdback ties up a meaningful share of proceeds for one to three years while warranty claims run their course. For a fund approaching the end of its life, or one that wants to mark a realized return, that delay has a cost the fund’s limited partners feel directly. W&I insurance lets a seller take a clean exit: full proceeds at completion, no escrow, no residual liability sitting on the fund’s books.
The same logic applies below private equity. A founder selling a family business to a strategic buyer, or management selling to a new sponsor, faces the same question: how much of the sale price should stay contingent on warranties nobody expects to be breached. Where founders remain in the business post-completion, or where the buyer needs the seller’s goodwill through a transition period, insurance removes a source of friction that has nothing to do with deal value and everything to do with the post-closing relationship.
The price of certainty: premiums, retentions and de minimis in mid-market deals
None of that comes free, and the terms are more standardized than dealmakers new to the product often expect. Premiums for an active trading business typically price at 1 to 2 percent of the policy limit, payable at or shortly after completion, with real estate transactions pricing lower. The policy limit itself is rarely the full deal value: buy-side cover usually runs 10 to 30 percent of transaction value, occasionally stretching to 50 percent, on the view that a full-value policy would rarely be tested.
Below the policy limit sit two thresholds that determine when a claim actually pays. The de minimis sets a floor for individual claims, and the retention, or deductible, is the aggregate loss the insured absorbs before the policy responds at all. Insurers increasingly offer a “tipping to nil” structure, where crossing the retention triggers cover for the full loss rather than just the excess.
| Policy parameter | Typical range, EUR 10–100 million deal value |
|---|---|
| De minimis (per-claim floor) | 0.1%–0.25% of transaction value |
| Retention / deductible | 0.5%–1% of transaction value; tipping to nil available |
| Policy limit, buy-side cover | 10%–30% of transaction value (up to 50% in some cases) |
| Claims period, general warranties | 2–3 years post-completion |
| Claims period, tax and fundamental warranties | Up to 7 years post-completion |
Exhibit 1. Typical W&I policy parameters for European mid-market transactions. Source: Van Campen Liem.
Europe’s four-year price decline reversed in 2025
For most of the period since 2021, buyers of W&I cover benefited from a soft market: an influx of insurance capital chasing a shrinking pool of mergers and acquisitions (M&A) activity pushed rates down every year. That cycle turned in 2025. Average premiums for representations and warranties cover rose 5 percent across Europe that year, a smaller increase than the 16 percent recorded in North America or the 8 percent in Asia, but a reversal all the same after years of decline. Pricing in the UK and Pacific markets stayed broadly flat.
The increase tracks a broader resurgence in dealmaking rather than a sudden repricing of risk. Global M&A deal value approached five trillion dollars in 2025, driven in part by 70 transactions above ten billion dollars, an 81 percent jump year on year, and Marsh alone placed a record 91.6 billion dollars in transactional risk limits globally, up 34 percent on 2024. Craig Schioppo, Marsh’s global head of transactional risk, attributed the shift to claims activity rather than a hardening market, describing it instead as a return to pricing levels last seen a few years earlier.
EMEA claims are rising fastest on financial statement and tax warranties
The claims data explains why insurers are recalibrating. Notifications across Europe, the Middle East and Africa (EMEA) rose 26 percent in 2024 compared with 2023, and Aon’s claims team has now helped clients recover more than 200 million dollars in paid claims across the region, with settlements paid in 2024 alone accounting for over a third of that total. Insurers indemnified 70.9 million dollars in losses for Aon’s EMEA clients in 2024 specifically. The top sources of breach notification across the region continue to be tax and financial statement warranties, with financial statement breaches the single largest driver of loss.
Claims frequency, the share of policies that see a claim at all, has held at roughly 20 percent as a historical norm across Aon’s EMEA book, though the 2021 vintage of policies, written during the frenetic post-pandemic deal boom, is running higher. By deal size, sub-100 million and 100 to 500 million transactions each account for 39 percent of claim notifications, with the mid-market band showing a disproportionately high initial loss estimate relative to the volume of policies written there, a pattern Aon attributes partly to owner-managed sellers with a personal stake in how cleanly they exit. Market adoption still varies by geography: the UK and Nordics moved early and remain the most comfortable users of the product, while France and Southern Europe adopted later but now treat it as a mainstream feature of deal structuring across the region.
What this means for a Swiss mid-market seller
None of this argues against using W&I insurance. It argues for structuring the policy deliberately rather than treating it as a box to check during due diligence. A five percent premium increase changes the economics of a deal at the margin. A poorly negotiated retention, an unhelpfully narrow de minimis, or a policy that fails to mirror the warranties actually given in the purchase agreement changes them a great deal more, and the gap shows up only when a claim is filed.
For a Swiss mid-market sale, whether a founder exit, a family succession, or a sponsor-to-sponsor transaction, the sequence matters: engage a broker early enough that the policy can be shaped around the deal’s actual risk profile rather than bolted on after the warranties are negotiated, and make sure due diligence scope and disclosure are built to satisfy an underwriter as well as a buyer. Neumarz structures cross-border mid-market transactions with that sequencing in mind, treating the W&I placement as part of deal architecture rather than a late-stage insurance purchase, so a clean exit is the result of how the deal was built rather than a hope attached to it at signing.
References
- Van Campen Liem. “Warranty & Indemnity (W&I) Insurance.” https://vancampenliem.com/warranty-indemnity-wi-insurance/
- CFO Dive. “Deal insurance gets pricier after years of decline: Marsh.” March 27, 2026. https://www.cfodive.com/news/deal-insurance-gets-pricier-years-decline/816025/
- Marsh. “Transactional risk insurance 2025: Year in review.” https://www.marsh.com/en/services/private-equity-mergers-acquisitions/insights/global-transactional-risk-report.html
- Aon. “Chapter 6: EMEA Highlights and Introduction,” 2025 Transaction Solutions Global Claims Study. https://www.aon.com/en/insights/reports/transaction-solutions-global-claims-study/chapter-6-emea-highlights-and-introduction
- Aon. “Chapter 7: EMEA Claim Frequency and Metrics,” 2025 Transaction Solutions Global Claims Study. https://www.aon.com/en/insights/reports/transaction-solutions-global-claims-study/chapter-7-emea-claims-frequency-and-metrics
