DealLawyers.com Blog

Woodruff Sawyer recently published a report on Trends in Private Equity, Insurance Due Diligence, and RWI. Here are some of the report’s key insights on the state of the RWI market:

– The reps and warranties insurance market is not growing at the rate seen in previous years. A notable development has been the consolidation of Themis into Ryan, with Ryan taking over Themis’s book of business and absorbing its underwriters. Mergers like this can influence competition, pricing, and capacity in the sector.

– The market continues to be highly competitive. We have stopped seeing quotes for less than 2% of the limit, but we rarely see a quote as high as 3%. The rate is still much lower than it was in 2022, when it averaged 5.1% in the first quarter.

– The RWI market is evolving to better serve smaller transactions that were traditionally overlooked due to high costs and extensive diligence requirements. Two underwriting markets are creating products and processes specifically for smaller deals. They offer standardized policies, simplified underwriting, and cost-effective coverage, making RWI accessible for deals under $50 million.

The report also notes that claim activity is on the rise, as often happens during economic downturns, and that’s been accompanied by increased dissatisfaction with how claims are being handled. The report suggests that part of the reason for the increasing dissatisfaction is insureds taking a shot at more speculative claims. The report says that this is leading to “an almost two-tier system” for RWI claims, in which some carriers are pushing back on legitimate claims based on small technicalities, while others continue to take a more accommodating approach.

– John Jenkins