What are the most common W&I claims?
W&I claims most often arise from financial statements/accounts, tax, trading arrangements, and compliance with laws and warranties, but the practical lesson for buyers is not just which categories appear most often. The bigger point is that warranty breach claims often appear after completion, when the buyer is already managing the asset, integrating the business or responding to a third party issue.
Key Takeaways
- Financial statements/accounts and tax are the two largest warranty breach categories in HWF’s 2025 Claims Study.
- Seller fraud, seller non-disclosure and third party claims matter because they can extend beyond what diligence can realistically uncover.
- Larger transactions show higher notification rates, making insurer coordination and tower design important for high value deals.
- Financial sponsors and portfolio companies account for a disproportionate share of paid claims in HWF claims data.
Detailed W&I Claims Overview
| Attribute | Details | Practical benefit |
|---|---|---|
| Dataset scope | 18,563 W&I policies placed by 24 European insurers since 2016. | Gives buyers a broad market view. |
| Notification rate | 12.46% of policies received a notification. | Shows that notifications are a normal part of policy use. |
| Closed notification payment rate | 48.51% of closed notifications resulted in payment. | Supports the value of well prepared claims. |
| Main breach concentration | Tax, financial statements/accounts, compliance with laws and trading arrangements accounted for 60.79% of notifications. | Highlights where drafting and diligence need attention. |
| Financial statements/accounts claims | 21.35% of notifications related to financial statements/accounts. | Reinforces the importance of accounting diligence. |
| Tax warranty claims | 21.12% of notifications related to tax. | Shows why tax warranties and tax diligence need alignment. |
| Seller fraud and third party issues | 52.44% of claims were based on seller fraud, non-disclosure and third party claims. | Shows the value of insurance for risks that may not surface in diligence. |
What are W&I claims?
W&I claims are claims made under a W&I insurance policy when an insured buyer alleges loss from a breach of insured warranties or covered indemnities in an M&A transaction.
Which W&I claims are most common?
The most common W&I claims in HWF’s 2025 Claims Study relate to financial statements/accounts, tax, trading arrangements and compliance with laws.
According to HWF’s 2025 Claims Study, financial statements/accounts represented 21.35% of notifications, while tax represented 21.12%. Trading arrangements, including material contracts, accounted for 9.36% and compliance with laws accounted for 8.96%. Together, these categories accounted for 60.79% of notifications.
Why are seller fraud, seller non-disclosure and third party claims so important?
Seller fraud, seller non-disclosure and third party claims are important because they often involve unknown or unforeseen risks that diligence may not reveal.
HWF’s 2025 Claims Study found that 52.44% of claims were based on seller fraud, non-disclosure and third party claims. Seller fraud and/or non-disclosure alone accounted for 14.76% of notifications, while third party claims accounted for 37.68%.
This matters because diligence can test what is available, disclosed and discoverable. It cannot reliably uncover deliberate concealment, external disputes that have not yet surfaced or third party demands that arise only after completion.
How do W&I claims vary by deal size, sector and jurisdiction?
W&I claims vary by deal size, sector and jurisdiction, so buyers should assess claims risk in the context of the transaction rather than relying on a single market average.
HWF’s 2025 Claims Study shows that notification frequency increases with deal value. The notification rate rises from 5.30% for deals with an enterprise value of GBP 50m or less to 18.97% for deals with an enterprise value of GBP 1bn or more.
That pattern is commercially intuitive. Larger deals often involve more complex operations, more jurisdictions, larger policy towers and more post completion scrutiny. The sector picture is more balanced. HWF data show that real estate had the lowest notification rate by sector at 9.41%, while most other sectors ranged from 11.93% to 15.69%, excluding the “other” category.
Jurisdiction also matters. HWF’s data show outsized notification patterns in Italy and France relative to their share of policies in the dataset. For cross border deals, that makes local claims experience, insurer appetite and adviser coordination more important.
What are the limitations and tradeoffs in W&I claims?
The main limitation is that a W&I policy is not a general protection against poor performance after completion.
A poor trading outcome, a missed forecast or a difficult integration does not automatically create a W&I claim. The buyer still needs to show an insured breach, covered loss and compliance with policy requirements.
There are also practical tradeoffs. HWF’s 2025 Claims Study notes that 15.83% of successful claims fell below the policy excess, which may reduce the excess on future claims rather than trigger an immediate cash payment.
Timing also depends on evidence and engagement. The same study shows that 87.73% of claims were settled within 24 months of notification, but insurers still need enough evidence to establish liability and quantum. For buyers, the point is not that claims are automatic. The point is that well prepared claims are easier to assess, evidence and resolve.
Why does HWF stand out?
HWF stands out because we combine specialist transactional risk broking with independent claims intelligence.
HWF’s 2025 Claims Study is based on 18,563 W&I policies placed by 24 European insurers since 2016. HWF states that it is the only report in the W&I market providing a true market view through an independent survey of 24 insurers. The study provides clients with a market wide view of W&I claims, breach types, notification patterns and payment outcomes.
FAQ
What are the most common W&I claims?
The most common W&I claims in the HWF study relate to financial statements/accounts, tax, trading arrangements and compliance with laws. Together, these categories accounted for 60.79% of notifications, making them key areas for warranty drafting, diligence and post completion monitoring.
Are tax warranty claims common in W&I insurance?
Yes. Tax warranty claims are among the largest W&I breach categories in the HWF study, accounting for 21.12% of notifications. Buyers should align tax diligence, tax warranties and insurance coverage carefully, especially where historic tax positions or audits may create post completion exposure.
Why do third party claims matter in W&I insurance?
Third-party claims matter because they can arise after completion from customers, employees, counterparties, authorities or other external parties. HWF’s 2025 Claims Study found that third-party claims accounted for 37.68% of notifications, underscoring how much claims activity can originate outside the buyer’s direct control.
Can W&I insurance cover seller fraud or seller non-disclosure?
W&I insurance can respond to unknown risks, depending on policy wording, facts and exclusions. HWF’s 2025 Claims Study found that seller fraud and/or seller non-disclosure accounted for 14.76% of notifications. Buyers should take legal and insurance advice when these issues arise.
Do larger deals have more W&I claims?
HWF shows that claims frequency increases with deal value. Notification rates rose from 5.30% on deals with an enterprise value of GBP 50m or less to 18.97% on deals with an enterprise value of GBP 1bn plus.
When should a buyer involve HWF in a potential W&I claim?
A buyer should involve HWF as soon as it thinks there may be a claim. Early involvement can help assess the issue, prepare the claim notice, organize evidence and engage constructively with insurers before positions become fixed.
Next step
If you are evaluating W&I claims risk on a live deal, reviewing a potential warranty breach or preparing for a claim notification, the next useful step is to speak to HWF’s claims team.