Contingent Risk Insurance
We continue to lead the development of innovative insurance solutions, replacing traditional risk allocation methods. We thrive on innovating around various contingent risks.
Why should you insure against "known" risks?
Why do I need Contingent Risk Insurance?
Contingent Risk Insurance offers coverage to mitigate risks linked to specific and identified liabilities subject to legal and accounting scrutiny. It becomes crucial when investors or financiers mandate its purchase to safeguard the business valuation and their investment or financial position in the company.
Contingent Risk Insurance solutions
Insurance typically addresses the unknown, but with the increasing market for covering “known” risks within and outside M&A transactions, we stand out.
We lead in developing insurance-backed solutions to replace traditional risk allocation methods, embracing innovation in managing contingent risks. Contingent Risk Insurance provides financial security when identified risks materialise. Given the uniqueness of each known risk, our policies are bespoke, requiring a carefully scoped definition of “insured loss” tailored to specific circumstances.
For a risk to be insurable, it must meet the following criteria:
Robust Legal Analysis: Expert legal analysis in relevant jurisdictions, including due diligence reports.
Quantifiability: The risk must be quantifiable.
Low Probability of Loss: The likelihood of loss needs to be relatively low.
Litigation Stage: For litigation risks, insurers typically expect the case to be at the appeal stage with concrete arguments supporting the success/failure.
What our clients say
A smooth W&I process on our transactions, whether acquiring or divesting, is paramount for LDC as an investor. We regularly work with the Paragon team, where given the choice, because their expertise and in-depth knowledge of the M&A insurance market enables them to achieve fantastic results in tight timeframes.
Their strong knowledge of how insurance solutions fit into M&A processes is second to none and the team has consistently provided invaluable contributions through the underwriting and policy negotiation phases showing their commitment to understanding the assets and specific issues involved.
As an M&A adviser we are always looking for partners who can assistant in reducing friction and complexity in transactions – helping to keep the focus on what really matters most to our clients. Having worked with a range of brokers in the space, the team at Paragon is a clear standout in developing fit-for-purpose insurance solutions and being trusted to deliver what they’ve promised. They are a pleasure to work with.
Contingent Risk Insurance FAQ’s
We collaborate with you and your advisors to present a comprehensive risk analysis, increasing the likelihood of obtaining a comprehensive solution. While the insurability may not be immediately apparent, our experience allows us to assess whether a known risk is uninsurable early on, facilitating the exploration of alternative risk-addressing measures when necessary.
The policy covers damages awards, settlements, and defence costs associated with the identified risks.
Cost factors include the nature of the risk/dispute, insurer attachment point, and the stage of proceedings. Premium rates, typically ranging from 0.4% to 20%, are calculated based on the liability/policy limit. Payments are made upfront, with additional charges for insurance premium tax and underwriting fees.