Warranty and Indemnity (W&I) products are among the most complicated and least understood in the insurance market, but with a 300% increase in W&I claims across the EMEA region since 2016, the need for them is rising fast.
The latest research from Marsh JLT Specialty showed a 293% rise in claims between 2016 and 2018, and, according to insurance brokerage Aon, New Zealand has not escaped the trend. Aon launched a new Warranty & Indemnity insurance product to its Australian and New Zealand markets earlier this year, and recently appointed a new director of M&A solutions in New Zealand – Jonty Vavasour.
Given the mounting need for W&I products, Vavasour says that Aon’s strategy for the next 12 months will continue to focus on its big-ticket W&I clients, but will also emphasise the importance of cover for small to medium New Zealand businesses.
“The appetite for warranty and indemnity (W&I) insurance across the New Zealand market is continuing to grow,” Vavasour explained.
“We believe we can better serve our New Zealand client base through on-the-ground expertise and knowledge. We will continue to listen to our larger client base about their longer term divestment and acquisition strategies, and design and implement W&I insurance policies accordingly.”
“We are also keen to dispel a few myths about W&I insurance,” he added. “Specifically, there is the perception that W&I insurance is only available for larger-ticket transactions. While the benefits of W&I insurance for these larger deals is proven, there is nothing preventing us from working with our SME clients in structuring bespoke W&I insurance protection for smaller assets such as farms, and enterprises with a value of circa $5 million.”
Vavasour says that Aon will be looking to undertake closer partnerships with insurers as they increase their presence in New Zealand, and aims to tap into previously un-accessed parts of the market. He says that Aon’s W&I offering will remain broad, and will benefit from the tailored, hands-on experience of brokers with significant expertise in this area.
“Aon’s team of experts develop deep relationships with our clients to fully understand their business and transaction objectives,” he explained.
“This means we can advise on and structure warranty and indemnity solutions, and this in turn can reduce borrowing costs by alleviating the need for allocation of funding for any claims that come in post completion of the transaction.”
