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Sponsors who build their insurance architecture early will execute faster, distribute sooner and better protect value. That is the central message from the current warranty and indemnity (W&I) insurance market.
Asia's secondaries market is gaining momentum. As fundraising slows amid geopolitical uncertainty and liquidity pressure intensifies, secondaries transactions are an increasingly attractive solution, and W&I use in secondaries has grown in tandem. Every secondaries transaction is, at its core, an M&A event – a transfer of interests in underlying assets backed by warranties. W&I shifts the risk of warranty breaches from selling funds and LPs to insurers, facilitating cleaner exits, preserved commercial relationships and less conflict between GPs and LPs.
The W&I landscape is evolving in pricing, coverage scope, underwriting discipline and product architecture. Below, we set out the key developments.
Stabilising premiums, widening coverage
The era of pricing as the primary competitive lever is over. What now differentiates insurers is coverage scope.
Historically, W&I in secondaries was confined to title, capacity and authority. That is changing. As volume grows and investors demand more comprehensive protection, insurers are offering broader, more M&A-like suites of operational and business warranties on underlying assets – bringing secondaries W&I materially closer to the coverage profile investors expect in conventional M&A.
While broader coverage may carry an uplift in premium, pricing is likely to remain competitive relative to the scope of protection on offer. For sponsors and LPs, this means more comprehensive risk transfer is genuinely available. The conversation has shifted from ‘what does it cost?’ to ‘what coverage do we actually need?’ – and that is the right question to be asking.
Claims are rising. How does that affect your deal?
Coverage is broadening, but underwriting scrutiny is tightening in parallel, driven by increased claims frequency and severity across the broader W&I market.
Where warranties are limited to title, capacity and authority, insurers remain comfortable with relatively light-touch diligence. However, for transactions seeking a fuller warranty package, extending to operational and business warranties, insurers increasingly require more robust diligence and fuller disclosure, particularly around financial and tax matters that sit at the core of valuation in continuation vehicles.
In GP-led secondaries, underwriters are also placing increasing weight on process integrity and conflict management. Sponsors who can demonstrate genuine conflict governance — a competitive process, independent oversight, transparent disclosure and meaningful lead investor engagement, materially improve the underwriting environment and unlock broader coverage on better terms.
Designing the right insurance architecture
W&I carries standard and deal-specific exclusions. In the pursuit of exiting with minimal residual risk, and returning capital to LPs, sponsors look beyond standard W&I to de-risk comprehensively. This is achieved through deliberate structuring and risk allocation between exiting and incoming parties, and layering purpose-built products, such as tax and contingent risk cover, alongside W&I to assemble a more complete risk transfer solution.
The market is increasingly developing and innovating these complementary products, enabling sponsors to build a multi-layered insurance architecture tailored to secondaries-specific exposures.
In secondaries, where the focus is on realising value and accelerating distributions with minimal trailing liability, a comprehensive insurance architecture, deliberately designed from the outset with W&I as one layer alongside tax and contingent risk cover, is essential. Retrofitting cover at the end of a process is both slower and more expensive. The architecture should be designed at the beginning, not discovered at the end.
What this means for you
The W&I market in Asia secondaries has moved, and it is more sophisticated, more demanding and more capable than it was even two years ago.
Sponsors who engage with insurance strategy early, build a comprehensive multi-product architecture and invest in demonstrating genuine process integrity will exit faster, distribute earlier and better protect value for their LPs.
Those who treat insurance as a box-ticking exercise at the end of a process will find themselves with narrower coverage, more friction in underwriting and residual risk they had not anticipated.
The secondaries market in Asia is growing. Make sure your insurance architecture is ready to keep pace.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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