Coronavirus (COVID-19): Implications for Representations and Warranties Insurance

Summary

The novel coronavirus (COVID-19) has swept across the globe in historic fashion, prompting unprecedented turbulence in the markets and the closure and disruption of numerous businesses in virtually every industry. The ripple effects of the pandemic have already had a considerable impact on ongoing and future mergers and acquisitions as dealmakers scramble to grapple with the new uncertain landscape. In recent years, representations and warranties insurance (RWI) has become an increasingly popular risk allocation tool for M&A transactions, and so buyers and sellers are understandably anxious to get a better grasp of how insurers are responding to the current environment, especially with respect to the possibility of enhanced underwriting scrutiny and new policy exclusions, which may severely limit the desired scope of coverage.