Warranties and Indemnities Insurance

A growing product within the M&A space, Warranties and Indemnities (W&I) insurance offers important deal safeguards. It provides protection in mergers and acquisitions by covering financial losses arising from breaches of warranties or indemnities in the sales and purchase agreement.

Basically, it shifts the risk from the seller or buyer to the insurer, offering peace of mind that if undisclosed liabilities or inaccuracies in pre deal representations occur post-transaction, the policy will compensate for the resulting costs. This naturally helps facilitate smoother negotiations and faster deal completion, saving on advisor’s costs along the way. 😊

An even stronger indicator of the benefit of W&I insurance is that this cover frequently depends on the successful delivery of cyber due diligence.

Underpinning the integrity of all business data, strong cyber security standards provide W&I insurers with confidence that the target company has robust controls to prevent data breaches, regulatory violations, and operational disruptions. This in turn reduces the likelihood of hidden liabilities emerging post-transaction, lowers underwriting risk, and often enables broader coverage with fewer exclusions, making the deal more secure and predictable.

So how do TPCS fit in, well we offer cyber due diligence that provides W&I insurers with the following risk benefits:

Identify Material Cyber Risk: Cyber incidents can lead to financial, regulatory, and reputational damage, significantly impacting deal value.

Underwriting Accuracy: Insurers will require visibility into cyber risks to accurately price policies and avoid broad exclusions within the policy itself.

Confirm Legal Compliance: Non-compliance with regional or global cyber laws and or data laws such as GDPR and CCPA can result in substantial post-closing liabilities.

Prevents Increase in Claims: The continued rise in cyber-related W&I claims highlights the importance of solid and detailed cyber due diligence in reducing deal exposure.

Supports Wider Insurance Cover: Conducting thorough cyber security checks aids in securing broader policy coverage and minimising the chance of wider policy exclusions.

If you are not yet ready to engage with TPCS, then you may wish to consider how to measure the following cyber security basics before offering coverage to clients.

Cyber Governance & Policies

IT Infrastructure & Security

Data Protection & Privacy

Cyber Incident History

Supplier Cyber Risk

Cyber Insurance Coverage

If you are ready to engage with TPCS and you want to ensure your W&I coverage and products are supported by appropriate cyber security, then reach out to us for help. Our cyber security experts are here to support your insurance offerings.

The TPCS Takeaway: TPCS Cyber Due Diligence empowers W&I insurers to deliver smarter, stronger coverage. By uncovering hidden cyber risks and ensuring compliance, we help insurers underwrite with confidence, reduce exclusions, and enhance the value of their product offering.