M&A Risks Rise as Asia’s Transaction Insurance Market Matures

M&A Risks Rise as Asia’s Transaction Insurance Market Matures

Transaction insurance is becoming an increasingly important tool in Asia Pacific dealmaking. As the market matures, claims are rising – and large, cross-border transactions are producing increasingly severe losses, according to a new Aon study.

The transaction risk insurance market in Asia Pacific is entering a new phase of maturity, with rising claims activity and increasingly severe losses.

Transaction risk products, including warranty and indemnity (W&I) insurance and standalone tax liability insurance, are now playing a more prominent role in deal structuring and risk management across the region, according to Aon’s 2026 Global Transaction Solutions Claims Study.

Growing underwriting capacity and wider adoption in markets including India, Singapore and South Korea have accelerated the integration of these products into mergers and acquisitions.

«We are seeing greater claims frequency and higher-severity outcomes, particularly in large and cross-border transactions, reinforcing the value of Warranty & Indemnity and tax insurance in protecting deal value,» said Martijn de Lange, Managing Director of Transaction Solutions in APAC at Aon.

Claims activity on the rise

As the market has expanded over the past decade, claims activity in Asia Pacific has steadily increased. According to Aon, the trend is providing insurers and dealmakers with deeper insights into claims frequency, severity and the main drivers of losses.

Aon secured more than $26 million in claims for clients across Asia Pacific over the past three years, including several high-severity cases.

The figures remain well below those recorded in the more mature North American market. Aon clients there recovered more than $1 billion from transaction solutions claims in 2025. Average payouts exceeded $10 million, while median payments reached more than $8.2 million – both record highs.

Claims activity in Asia Pacific was initially concentrated in Australia and New Zealand, where W&I insurance was first widely adopted. A second wave of growth is now emerging across India, South Korea and Southeast Asia.

Tax insurance gains traction

Standalone tax liability insurance has also become a regular feature of transactions in India and is gaining traction in South Korea, Japan, China and Australia.

The policies are increasingly being used to manage identified tax exposures, including capital gains tax exemptions, withholding taxes and net operating losses.

Aon expects claims activity to increase further as adoption grows and existing policies mature.

Large deals bring larger losses

One of the most significant trends identified in the study is the growing severity of claims in Asia Pacific.

Losses are particularly pronounced in large-cap and cross-border transactions, with several claims exceeding $10 million.

Tax and regulatory exposures are responsible for some of the region’s largest and most complex cases. These risks can emerge several years after a transaction has been completed, creating a pronounced long-tail claims profile.

While operational and disclosure-related issues typically surface within the first year following completion, tax claims may be notified more than five years after a policy has been taken out. This reflects lengthy audit cycles and regulatory enforcement timelines across the region.

Disclosure and compliance risks dominate

Disclosure issues, inaccurate financial statements, regulatory breaches and tax exposures remain among the most frequent causes of transaction insurance claims across Asia Pacific.

Typical cases include undisclosed or misrepresented material contracts and liabilities, discrepancies between reported financial results and underlying business performance, regulatory and licensing failures, and tax disputes involving transfer pricing, customs duties and withholding obligations.

The nature of claims also varies significantly between industries.

In real estate and infrastructure, losses are frequently linked to asset conditions, environmental liabilities and lease obligations. Consumer and retail companies face risks related to regulatory scrutiny, customer liabilities and disclosure failures.

In the technology and payments sectors, licensing, certification and concentration risks involving major contracts are among the main sources of claims.

Complex cross-border structures, meanwhile, are particularly exposed to tax and regulatory risks.

Transaction insurance becomes part of deal strategy

The findings suggest that W&I and tax insurance are increasingly becoming an integral part of transaction planning and risk management, particularly for large and cross-border deals where traditional recourse against the seller may be limited.

«As claims experience deepens across Asia Pacific, clients are becoming more confident in pursuing recovery and leveraging these solutions as part of their deal strategy,» said Anita Vivekananda, Managing Director of Transaction Solutions in APAC at Aon.

At the same time, she warned that the growing prevalence of long-tail tax and regulatory exposures was contributing to a more complex risk environment.

Aon’s 2026 Global Transaction Solutions Claims Study is based on the firm’s global claims experience. The professional services group said it has supported clients on more than 2,000 transaction solutions claims and secured over $3 billion in recoveries worldwide.