How can deal teams capitalise on the latest trend in the deal insurance market to improve bid success?
By Tom Evans, Paul Davies, David Walker, Michael Green, Aoife McCabe, Harry Redford, Catherine Campbell, and Amy Watkins
The emergence of contingent risk insurance policies, which address known risks that would otherwise be excluded from coverage under traditional W&I insurance, is an exciting recent trend in the deal insurance market. PE funds that identify previously uninsurable risks through due diligence now have the possibility of transferring such risks to insurers, rather than seeking either a price reduction or escrow retention from the purchase price. Therefore, the use of contingent risk insurance can make a PE fund’s bid more competitive and, as a result, more likely to succeed.