ATLANTA — The use of representations and warranties insurance in financial transactions has grown substantially over the past few years, along with the number of market players, according to a panel discussion last week at the 30th annual Professional Liability Underwriters Society conference in Atlanta.

“It’s been a huge success,” said John McNally, senior vice president with JLT Specialty USA, a unit of Jardine Lloyd Thompson Group P.L.C., in New York, adding that some 19 markets in the U.S. with specialized teams provide $1.1 billion to $1.2 billion in available capital per risk.

“If we rewind just three years in the U.S market to just the beginning of 2015, there were five insurers doing this, so we’ve almost quadrupled the number of providers with specialist teams, which is a huge change in a very short period of time,” Mr. McNally said.

Building those specialist teams properly has been important to the market’s growth, panelists said.

“Investing in talent is the key,” said Rainer Schadel, Munich-based senior underwriter at Munich Reinsurance Co. “I think it’s key that you have talent and have the underwriting expertise.”

He added that the market has been growing in both directions regarding capacity available for small and medium-sized deals as well as larger transactions. He added that the market has been growing in both directions with capacity available for small and medium-sized deals as well as larger transactions.

According to a definition from the International Risk Management Institute Inc., reps and warranties insurance is “a form of coverage designed to guarantee the contractual representations made by sellers associated with corporate mergers and acquisitions. The key benefit of the policies is that they provide a viable alternative to escrow funds, which have traditionally been used to satisfy claims associated with representations and warranties contained in merger and acquisition documents.”

Much of the activity has come from private equity buyers, with less emphasis on public deals, panelists said.

“Private equity has actually been the greatest source of production for this business, less so on the public transactions,” said Sean P. Whelan, executive vice president with Willis Re Inc. in New York.

One panel member said he has seen the use of reps and warranties grow substantially at his law firm.

“I’d say it’s gone from 0% knowledge (of the product) to some 60% of our deals are using it,” said Jeremy S. Liss, a partner with Kirkland & Ellis L.L.P. in Chicago. With his firm most often on the buy side, “rarely do we see a process where the sellers aren’t expecting our client to use the product.”