Representations and Warranties Market Trends in Q2 2024

The number of submissions in the Representations and Warranties marketplace continued to rise in Q2 2024, above the previous quarter. This is consistent with the increase in M&A activity we have seen in the U.S., as inflation is expected to remain steady or drop, and investors have adjusted to the geopolitical climate.

Despite the increased number of submissions in the marketplace, pricing for Representations and Warranties policies remains at an all-time low, with rates hovering around 2.6%. Additionally, retentions on policies have significantly decreased as insurers try to get creative on how to win deals without giving up too much premium.

Looking ahead, we anticipate the low rates will continue in the short-to-medium term because there is still excess underwriting capacity in the marketplace. However, we expect that rates will begin to rise in 2025. Given the continued rate of claims on Representations and Warranties policies and the dollar value of claims payouts, premium rates will need to rise in the future.