Co-founder Jorrit Willaert shares a preview of the Jurimesh W&I insurance guide and why it’s important for Belgian dealmakers.
Building on recent discussions around how risk transfer is rewriting M&A, practitioner data from Jurimesh – developed with input from Raphaël Delsaux at Howden M&A – provides a detailed look at the operational mechanics governing W&I insurance in Belgium.
“Above roughly €20 million enterprise value, W&I is now expected in most sale processes, and in PE-to-PE deals it is close to universal,” says Jurimesh co-founder and ceo, Jorrit Willaert.
This is largely because of the structural problem W&I solves. “When a buyer acquires a company, the seller warrants the state of the business. If those warranties prove false, the buyer has a claim, but by the time it surfaces – typically 12 to 36 months after closing – the seller may no longer be able to pay,” Jorrit shares.
He explains that, in private equity deals specifically, the selling entity is often a special purpose vehicle (SPV) that has already distributed the proceeds to its fund investors. The shell that remains has no assets and pursuing it is an expensive exercise in futility.
Even in founder-led deals (which make up the majority of M&A in Belgium), a selling family may be unwilling to engage with a claim that touches their personal liquidity.
“W&I lets the buyer claim directly against an A-rated insurer instead of the seller. That removes the need for escrows or holdbacks, allows 100 percent of the proceeds to be paid at closing and gives the seller a clean exit," Jorrit reveals, adding that it also removes the friction in deals where the seller rolls equity or stays on to manage the business.
Overall, it has become a competitive bidding tool: “A buyer who relies on W&I rather than on the seller for post-closing claims is simply a more attractive counterparty,” Jorrit emphasises.
Read also: Jurimesh experts reveal how tech is changing the risk game for legal due diligence
Benelux is way ahead with W&I
Because the Benelux region was an early adopter of W&I policies, the local market is much more sophisticated regarding risk and claims than many international peers. That’s why it saw significantly more W&I policies receive claims (roughly 15 percent), compared to Europe’s eight percent.
“Of closed claims involving an actual loss, about 65 percent end in a payment or an erosion of the deductible, and only around 2 percent require litigation against the insurer,” Jorrit elaborates, signalling that “this is a product that pays”.
This maturity means W&I directly impacts how deal terms are structured. Jorrit mentions:
“It is a real line item in the structuring conversation, and one that occasionally influences where the acquiring entity sits."
He points out that W&I premiums are subject to insurance premium tax (IPT), which depends on where the insured entity is incorporated; “In Belgium, the rate is currently 9.60 percent, against 21 percent in the Netherlands and 4 percent in Luxembourg.”
For standard operational transactions in the Benelux, current pricing rates are roughly 0.70 percent to 1.10 percent of the policy limit, with real estate coming in at a low 0.40 to 0.80 percent. In comparison, higher-risk sectors or jurisdictions can push rates to two to four percent.
The report also indicates that insurers usually apply a deductible of 0.15 percent to 0.50 percent of enterprise value on Benelux deals, which can often tip to nil.
“The market is currently as competitive as it has ever been,” Jorrit notes.
Good coverage depends on auditable diligence
While dealmakers increasingly recognise W&I as a tool to unlock liquidity and bridge counterparty gaps, knowing how a policy is actually underwritten, priced and claimed upon when latent liabilities surface is where the real competitive edge lies.
The single biggest takeaway from Jurimesh’s report is something many deal teams miss: on an insured deal, your advisory due diligence report is not just for your investment committee. It is also the primary document the insurer uses to underwrite the policy.
“The insurer reads it to decide what they will and will not cover,” Jorrit explains. “So how a finding is worded, how a risk is rated and what the report admits it could not check all feed directly into the scope of coverage.”
He adds: “A report that acknowledges its own gaps honestly tends to be more insurable than one that asserts everything was fine.”
Part one of the Jurimesh M&A due diligence whitepaper series unpacks these and the many more operational realities that come with W&I. Read it here!
