b'Mergers & Acquisitions | Transactional Liability InsuranceUK and Europetesting of the parameters within which W&I insur-ance is traditionally defined. Corporate In the European W&I market, M&A deals emerging In a year unlike no other, the insurance industry facedfrom Poland and Hungary became increasingly unprecedented challenges throughout 2020a yearcommonparticularly in the logistics and real estate which brought forth fears of one of the most signifi- sectors. Increasing appetite for W&I insurance has cant loss events the industry has ever seen. While thisalso been present in the renewable energy sector. was no doubt a wide-reaching phenomenon, thePerhaps unsurprisingly, M&A deals involving retail or nature of warranty & indemnity insurance (W&I)hospitality were often passed over by underwriters meant this class was not facing the brunt of pay-outsnaturally seeking to avoid the significant risks that seen amongst others in the sector following claimssuch warranty sets posed among the prevailing seeking to mitigate the extensive business disruptioneconomic uncertainty. Deals involving the travel caused by the COVID-19 pandemic. Nevertheless,industry (especially aviation) were also hard-hit by W&I insurance does not operate in a vacuum and theinsurer demand to offer terms. COVID-19 pandemic has impacted W&I insurance, asWhile the expansion in demand for W&I insurance noted below.from new sectors is no doubt positive, insurance DECLINE IN M&A providers nevertheless faced pressures in the form of price squeezing. The combined effect of reduced As the onset of COVID-19 took a firm grasp acrossunderwriting opportunities due to the economic the globe, the decline in general M&A activity wasdownturn, alongside an increased number of insur-both substantial and swift which had an inevitableance providers saw notable pricing pressure among impact on the W&I insurance market; particularly ineven traditionally riskier deals. Despite this, how-the early throes of the pandemic during the firstever, 2021 may see a return to incremental price lockdown in 2020. Focus amongst W&I brokers andincreases, particularly if claims numbers are high in insurers quickly shifted to the potential opportuni- conjunction with a reduction in market providers of ties available in the distressed market. It becameW&I insurance who find the competitive environ-evident during the course of 2019 that thement simply too tight to operate profitably within. Government support packages were supporting many businesses that would otherwise haveEFFECTS ON UNDERWRITINGencountered solvency issues; which meant that weNaturally, requests for W&I insurance during quar-have not seen the full use of distressed W&I prod- ters three and four 2020 consistently tested the ucts. The transition between quarters two andappetite of underwriters to insure the effects being three of 2020 saw appetite for M&A deals begin tofelt by businesses from COVID-19. The initial position return and 2020 ended perhaps stronger thanadopted by underwriters to completely exclude the anticipated for both the M&A and W&I markets.negative effects of COVID-19 soon shifted into a EMERGING TRENDS more nuanced approach between quarters two and three. Underwriters sought to ensure terms being Global economic shake-ups often cause shifts inoffered were competitive by reigning back the focus to new opportunities once the dust settles.flat-out exclusion, instead seeking to underwrite W&I insurance was no different. Significant upliftsaround the negative effects of COVID-19 on a deal in tax enquiries were seen by W&I insurers through- by deal basis. The proviso for this being that buyers out the third quarter of 2020, alongside a general 32 GLOBAL INSURANCE INDUSTRY|YEAR IN REVIEW 2020'