Disclosure failures, financial statement inaccuracies, compliance breaches and tax exposure are all driving growth in transactional risk insurance, according to Aon.

Demand for the cover is growing in the Asia-Pacific region as corporates pursue mergers and acquisitions and then encounter issues once deals are completed, the broker says.

Operational and disclosure-related issues typically arise within a year after completion, but tax-related claims may be notified more than five years after policy inception, Aon’s latest Global Transaction Solutions Claims Study notes.

The broker says early claims activity in the region was concentrated in Australia and New Zealand, where warranty and indemnity (W&I) insurance was first adopted, but a second wave is emerging in India, South Korea and southeast Asia.

Aon has secured more than $US26 million ($37 million) in claims over the past three years.

APAC MD of transaction solutions Martijn de Lange says claims outcomes are shaped not only by policy coverage but also by the quality of due diligence, financial analysis and post-completion integration.

“We are seeing greater claims frequency and higher-severity outcomes, particularly in large and cross-border transactions, reinforcing the value of W&I and tax insurance in protecting deal value.”

Aon says typical claims across the region include:

• Undisclosed or misrepresented material contracts and liabilities.
• Gaps between reported financials and underlying performance.
• Regulatory and licensing non-compliance, particularly in highly regulated sectors.
• Tax disputes involving transfer pricing, customs duties and withholding obligations.