With the continued lag in M&A activity, the RWI market continues to remain competitive for insureds. Terms and rates continue to trend favorably. RWI providers are offering more attractive terms, streamlined processes, and greater flexibility – especially in the lower middle market.
Here’s a look at the latest trends shaping the RWI landscape in Q2 2025:
Favorable Pricing and Retentions
Rates remain competitive, with many insurers offering pricing below 3% of the limits purchased (the most aggressive carriers are quoting as low as 2.5% of the limits purchased).
Additionally, initial retentions continue to fall, with some deals seeing retentions as low as 0.5% of the enterprise value, a notable decrease from the historical standard of 1%.
Expanded Coverage Limits
Some carriers are now willing to offer limits as high as 50% of enterprise value – particularly on smaller transactions.
As coverage limits increase, rates scale down, offering greater value for buyers seeking broader protection.
Accessibility for Smaller Deals
RWI is no longer just for large-scale transactions. We’re seeing coverage available for deals as small as $5 million, making RWI an increasingly viable tool for a broader range of buyers.
Reduced Minimum Premiums
Minimum premiums have dropped significantly. What once required a $150,000 spend can now be secured for as little as $30,000, depending on deal size and structure.
Evolving Diligence Requirements
Some insurers now accept internal buyside diligence in lieu of third-party quality of earnings (QofE) reports. While this can reduce costs and accelerate timelines, it’s important to note that it limits your pool of potential insurers. We generally recommend a third-party QofE when possible to maximize options and negotiating power.
RWI as a Strategic Advantage
Perhaps most importantly, RWI isn’t solely used to protect buyers. RWI is being used as a deal-winning strategy. Buyers are leveraging RWI to offer sellers a clean exit with limited post-closing exposure, which can give them a competitive edge in securing LOIs in a crowded marketplace.
Let’s Talk About Your Next Deal
The Horton M&A Practice team is closely monitoring the RWI market and helping clients take full advantage of these trends. Whether you’re preparing for a transaction or exploring ways to de-risk your deal structure, we’re here to help. Contact us to learn how Reps and Warranties Insurance can strengthen your position in today’s competitive M&A environment.
Mike Richmond
Mike is a Senior Vice President at The Horton Group. As a trusted business advisor, he is responsible for analyzing every detail of a client’s business, determining every exposure and providing risk management programs to insulate his clients’ businesses from liability. Mik is also an attorney who studied law at night while working as an insurance consultant. His legal education gives him an intimate understanding of the liabilities businesses face, as well as the many ways those liabilities can affect businesses.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
