Record Surge in Claims for Warranties Insurance in 2025

Liberty Global Transaction Solutions has reported a dramatic 26% increase in claims notifications for its representations and warranties insurance in 2025, marking the highest number since records began in 2019.

This surge, highlighted in Liberty Mutual Insurance Group's 2026 Claims Briefing, reflects a total of 176 claims notifications, a peak compared to previous years. The proportion of policies leading to these claims is nearing one in four, a notable rise from the historical average of one in five. Regions like Europe, the Middle East, and Africa have significantly contributed to this trend since 2023. Additionally, claims involving payments of $10 million or more accounted for 75% of total payouts, up from 68% in 2024, suggesting a shift towards more expensive claims.

Regional Claim Disparities and Key Drivers

Liberty recorded substantial claims in various regions, with notable figures such as $55 million in Europe, the Middle East, and Africa, $50 million in Asia-Pacific, and $44 million in the Americas. The primary culprits for these losses are accounting and financial errors, making up 52% of the total paid and reserved amounts. Claims related to breaches in material contracts and issues with major customers also played significant roles in the volume of claims.

Factors influencing the rising costs include lower policy retentions, deal structures minimizing sellers' liabilities, aggressive buyer evaluations, and valuation-based loss calculations. Such dynamics highlight the evolving complexity and risk landscape faced by the insurance industry.

Implications for the Insurance Industry

As the landscape shifts, Gareth Rees, Global Lines Leader at Liberty Global Transaction Solutions, stresses the urgent need for the insurance industry to adapt. Insurers might need to rethink pricing strategies and coverage terms to handle larger payouts while maintaining value for policyholders.

• Increase in claims notifications: Represents a 26% rise in 2025, highest on record.
• Regional influence: Europe, the Middle East, and Africa report the most significant increases since 2023.
• High-value claims: Payments of $10 million or more make up 75% of total payouts.
• Primary loss sources: Accounting errors and financial discrepancies account for 52% of payouts.

For insurance professionals, understanding these trends is crucial for navigating the evolving risk environment and ensuring sustainable business operations. Future strategies might involve recalibrating underwriting guidelines, reassessing client engagement protocols, and innovating pricing models to align with the sector's changing dynamics.