Insurers Jostle to Give Cover for when Things Go Wrong

LONDON, Dec 11 Reuters A record rebound in merger activity this year and a rise in litigation has brought with it an upsurge in insurance policies that give companies and private equity firms cover for when a deal goes wrong, industry officials say.

Keen for revenue after a year marked by payouts for event cancellations and shuttered businesses, insurers are tapping into the appetite of dealseeking firms to protect themselves should the businesses they want to buy misrepresent their accounts.

For the sellers, insurance can help to guarantee a clean exit from any deal.

MA protection can also remove a companys need to set money aside for potential disputes and help them to avoid costly and lengthy litigation.

As a result, a spate of insurers has entered the market, with around 30 crowding in in Europe alone, broker Paragon said. Despite the rising level of claims, the entrants have pushed down premiums, but that could be temporary.

In 2008, you could have probably sat the whole of the London MA insurance community round a meeting room table, said Adrian Furlonge, partner at MA insurance broker Helmsley Wynne Furlonge. Now there are more than 300 people in that market.

Mark Fellows, head of financial lines at Aviva, said the British insurer entered the sector in 2019, and MA was becoming an established class of insurance.

MA insurance premium is likely to total 2 billion worldwide this year, James Swan, partner at broker McGill and Partners, said.

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