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The slower pace of M&amp;A in recent times has allowed breathing room for transactional risk management to grow and develop based on what was learned from the most previous peak in transactions.

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“Our firm does a lot of middle-market work,” says&nbsp;Lisa Campisi, a partner in the insurance recovery practice at&nbsp;Blank Rome. “At the peak of M&amp;A activity a couple years ago, it seemed that underwriters were driving harder bargains on terms and conditions. The market seems to be softer now, so you can get often better quotes and terms than even a year ago.”

For all the development in RWI, speed of claims processing remains a concern. “Deal people are accustomed to speed,”&nbsp;says Campisi. “They like to close deals in a few months. RWI claims can take a year or more. We have one private equity client that has two claims that have taken more than three years. To be fair, those are complex claims, but still, it’s not the time horizons to which M&amp;A people are accustomed.”

Valuations can be a significant complicating factor in claims. “There was a dispute about how much to pay for diminution of value,”&nbsp;Campisi recalls. “It came down to an accounting fight. Was it a one-time hit? Should there be a multiplier?”

That level of contention is rare, however, and disputes are best prevented at placement. In a softer market where underwriters cannot push much on rates, exclusions are still a lever they can pull. “Definitely look at exclusions and wording. There are always the basics, but additional exclusions, exceptions, and knowledge qualifiers can be less favorable to policyholders,”&nbsp;Campisi adds.

Most of the attention in RWI is on the buyer, who is usually the insured, but there are benefits for the sellers too, particularly in private equity. “PE sellers usually want out. After the deal they don’t want to know you,”&nbsp;says Campisi. “In deals like that where there is no recourse for the buyer, RWI is so important it’s almost become baked in.”

To read the full article, please click&nbsp;<a href="https://www.themiddlemarket.com/feature/rep-and-warranty-insurance-rates-decline-as-dealflow-slows">here</a>.

"Rep and Warranty Insurance Rates Decline as Deal Flow Slows," by Gregory DL Morris was published in&nbsp;<a href="https://www.themiddlemarket.com/feature/rep-and-warranty-insurance-rates-decline-as-dealflow-slows">Mergers &amp; Acquisitions</a>&nbsp;on August 26, 2024.

Rep and Warranty Insurance Rates Decline as Deal Flow Slows

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Rep and Warranty Insurance Rates Decline as Deal Flow Slows

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