| Trend | Range | |
|---|---|---|
| Representations and warranties insurance |  |
5% to -10% |
Key takeaway
With the advent of a new U.S. political administration at the beginning of 2025, representations and warranties insurance (“RWI”) practitioners anticipated a Q1 uptick in mergers and acquisitions (M&A) following two sluggish years of tempered deal activity. However, the uncertainties resulting from the new administration’s trade policies, and the related volatility in global stock markets, have dampened investors’ initial enthusiasm. As a result, U.S. dealmaking at the start of 2025 has been the slowest by volume in more than twenty years, and the looked-for spur in deal activity and corollary hardening of the RWI market after two years of intense, soft-market competition has not happened. Subsequently, this has complicated RWI insurers’ stated efforts to raise rates and contract coverage, which some had viewed as unsustainable in light of recent claims experiences. Despite the continued lag in deal flow, many carriers have tried to hold the line on rate and carve back coverage provisions they view as overbroad. Nevertheless, strong competition among carriers remains, buttressed by the continued entry of new capacity to the market.
Carriers continue to compete on rate and retention
- While some RWI insurers are attempting to set rate floors at or above 3% RoL, many carriers continue to compete on rate. The result is a suite of quotes with comparable coverage but distinct pricing tranches leading to certain carriers attempting to raise rates and others continuing to compete on premium.
New capacity continues to enter the market
- Despite the continued challenges in the RWI market, new entrants backed by new-to-market capacity continue to present themselves, with further additions on the horizon for 2025. These new carriers continue to stoke competition among established insurers and arguably create another impediment to an immediate rise in rates or revision in coverage.
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