Printed from

Severe reps and warranties claims drive losses: Study

Posted On: Dec. 1, 2023 2:01 PM CST


Severity is a major driver of losses paid by transactional risk insurers, with payments of $10 million or more constituting 64% of the value of claims paid over the past seven years, according to a study released Thursday by Euclid Transactional LLC.

The managing general agent, which focuses on representations and warranties insurance and other transactional risks, analyzed 5,089 policies it placed, 1,040 claims it received, and more than $561 million in total payments made from July 2016 through June 2023.

There were 97 claims paid, with 19 of those involving payments over $10 million, according to the report. The largest claim paid was $36 million and the average claim payment was $5,783,707.

Of the 1,040 claims received since 2016, fewer than 3% have been denied, the report said, though 70% were resolved without payment. Those claims were either below the retention or attachment point, or not pursued or withdrawn by the policyholder, according to the report.

The report also showed claims eating into policy limits, with 69.2% of losses paid by insurers coming from claim payments that were 50% or more of the policy limit and 42.5% of such losses amounting to 75% or more of the policy limit.