W&I Claims Frequency: How Often Do Claims Arise?
W&I claims are one of the clearest ways to test whether W&I insurance works after an M&A deal has closed. For private equity sponsors, buyers, risk managers and advisers, the practical question is not whether claims can happen. It is how often they arise, how often they lead to recoveries and what that means when structuring cover before signing. HWF’s 2025 Claims Study gives deal teams a useful evidence base, drawn from 18,563 W&I policies placed by 24 European insurers since 2016.
Key Takeaways
- The most useful claims analysis compares notification rate, policy paid rate, payment timing and breach category together.
- Seller fraud, non-disclosure and third party claims show why due diligence alone cannot eliminate every M&A risk.
- Financial sponsors appear to benefit from repeated market use, disciplined claims processes and insurer familiarity.
Detailed W&I Claims Overview
| Attribute | Details | Practical benefit |
|---|---|---|
| Data set | 18,563 W&I policies placed by 24 European insurers since 2016 | Gives deal teams a broad claims data set rather than a single insurer view |
| Notification rate | 12.46% of policies received a claim notification | Shows how often insureds actively use policies after completion |
| Policy paid rate | 4.29% of policies resulted in paid claims across the full data set | Shows that W&I policies can produce actual recoveries |
| Mature paid rate | Around 6.25% for the 2016 to 2019 policy years | Gives a more settled view of long term recovery outcomes |
| Closed notification payment rate | 48.51% of closed notifications resulted in payment | Helps insureds understand the gap between notification and recovery |
| Payment timing | 68.11% of claims were paid within 18 months of notification | Helps buyers form realistic expectations on recovery timing |
| Deal value pattern | Notification rates rise from 5.30% on deals of GBP 50m or less to 18.97% on GBP 1bn plus deals | Supports deeper planning on large cap and towered placements |
| Main breach areas | Tax, financial statements/accounts, compliance with laws and trading arrangements account for 60.79% of notifications | Shows where diligence, warranties and policy wording need close alignment |
How often do W&I claims arise?
The data show that claims activity is sufficiently material to shape policy design and buyer expectations. According to HWF’s 2025 Claims Study, the data set includes 2,310 notifications, representing a 12.46% notification rate across the sample.
That distinction matters because a notification is not the same as a recovery. Some notifications may fall below the excess, remain open, lack sufficient evidence or sit outside the scope of cover. The key point for deal teams is that more than 1 in 10 policies generated a notification, making the claims process a real commercial issue rather than a remote possibility.
The full data set shows a 4.29% policy paid rate. However, that headline number includes recent policy years where many notifications remain open. For older policy years, where most notifications are now closed, HWF reports that the 2016 to 2019 policy paid rate has settled at around 6.25%.
Key takeaway: claims frequency should be assessed by maturity year, not only by the headline paid rate.
How does deal size affect W&I claims frequency?
Deal size matters because larger transactions usually involve more complexity, more stakeholders, and higher potential loss. HWF’s 2025 Claims Study shows notification rates rising at each deal value band, from 5.30% on deals with an enterprise value of GBP 50m or less to 18.97% on deals of GBP 1bn plus.
What does payment timing tell buyers?
Payment timing helps buyers judge whether W&I insurance is a practical recovery tool, not only a theoretical deal protection product. HWF reports that 43.27% of claims are settled within 12 months of notification and 87.73% are settled within 24 months. It also reports that 68.11% of claims are paid within 18 months of notification.
The realistic comparison is not between a W&I claim and instant payment. The better comparison is between an insured claim and an uninsured warranty claim against a seller, where negotiation, litigation risk and enforcement risk may all remain live.
Why does HWF stand out?
HWF stands out because we combine specialist transactional risk placement with claims data. We help clients understand how policies perform when claims arise and how recovery risk should influence policy structure.
HWF’s 2025 Claims Study is now in its third edition. It canvasses 24 insurers and covers more than 18,500 policies across a nine year lookback period. HWF’s live report page describes the study as a market wide view of W&I claims trends, with insight into breach types, payment patterns and claims data. External legal market commentary has also recognized the value of HWF’s work. In 2024, Herbert Smith Freehills Kramer referred to HWF’s earlier claims study as the first true independent study of its kind, based on anonymized and aggregated data from leading insurers.
HWF can assist policyholders from notification to settlement, including help with claim assessment, initial notices, insurer communication and practical negotiation. HWF does not provide legal advice and provides claims advocacy in accordance with applicable regulatory rules and English law.
FAQ
How common are W&I claims?
W&I claims are common enough to be a serious transaction planning issue. HWF’s 2025 Claims Study reports a 12.46% notification rate across 18,563 W&I policies placed by 24 European insurers since 2016.
What types of W&I claims are most common?
The largest specific breach categories in HWF’s 2025 Claims Study are financial statements/accounts and tax. Together, compliance with laws and trading arrangements account for 60.79% of notifications.
Do larger deals have more W&I claims?
Yes. HWF’s data shows that notification frequency rises with deal value. The notification rate increases from 5.30% for deals of GBP 50m or less to 18.97% for deals of GBP 1bn or more.
How long do W&I claims take to pay?
Payment timing varies by complexity, evidence and insurer engagement. HWF’s 2025 Claims Study reports that 68.11% of claims were paid within 18 months of notification.
Next steps
If you are assessing W&I claims frequency on a live or upcoming transaction, the next useful step is to Contact HWF, who can help you use that analysis to structure cover, prepare for recovery risk and understand how the claims process is likely to work in practice.