When the representations and warranties (R&W) insurance market softens, as it has in 2025, brokers have more room to push for expansive coverage. But that flexibility comes with its own pressures – particularly as claim volumes rise and insurers weigh losses against depressed premiums.
“In a softer market, insurers are certainly open to covering a very wide range of deals,” said Emily Maier (pictured), senior vice president and head of transactional insurance at Woodruff Sawyer. “We’ve been able to get coverage for companies that historically have been difficult, and underwriters are responding more reasonably to internal diligence.”
The growing prevalence of R&W insurance in middle market transactions is reshaping the conversation around risk. Maier noted that while the absolute number of claims is increasing – driven by rising policy volumes – the pressure on premiums is mounting.
“There is still downward pressure on premiums,” she said. “That’s the biggest point of friction right now – the balance between what’s being asked for in coverage and what underwriters can actually charge.”
Claims themselves are also evolving. While breaches of financial reps continue to dominate filings, Maier sees increased activity in “compliance with laws” reps, particularly in regulated industries, and a noticeable uptick in disputes around the sufficiency of asset reps.
“The market’s become adept at underwriting financial statement risks, but we’re seeing more variability in how claims are handled,” Maier said. “Claims handling quality is now front and center in client discussions – whether it’s managed in-house, outsourced, or how much say underwriters retain.”
“There are only one or two markets that will write the more complex tax risks,” said Maier. “If it’s just about the merits of a tax position, pricing tends to be low. But once there’s audit activity, it becomes disproportionately expensive.”
Contingent litigation risks, however, are facing significant pullback. Following several full-limit losses, many underwriters have paused participation, Maier said. “There’s a desire to reassess how these are priced. That market is still in its infancy.”
For brokers, the transactional insurance space is becoming increasingly competitive – and nuanced. “Private equity firms see R&W insurance as table stakes,” Maier said. But while pricing pressure persists, value-adds now differentiate serious brokers from opportunistic players.
Some brokers, she said, have “got overenthusiastic” with fee structures – charging for diligence, claims support, or instituting minimums. In a capital-constrained environment, that can erode trust. “One bad claim can ruin a relationship,” she said. “And word travels fast.”
Maier argued that brokers need to bring real expertise to the table – not just pass documents between lawyers and underwriters. “You’ve got to be able to mock up policies, negotiate effectively, understand diligence exclusions, and track market norms across underwriters and law firms.”
As deal flow picks up and premiums start to rise, Maier expects tension between coverage and cost to ease somewhat. But the direction of the market is clear: expertise, claims advocacy, and fair pricing will separate brokers who lead from those who merely follow.
“We’ll see a differentiation between firms that do nothing but this – who know the market inside and out – and those that only dip in occasionally,” she said. “Those that overcharge but underdeliver will stand out for the wrong reasons.”
