Earlier this year, we surpassed $1.5 billion in claims paid to our clients.
When we started underwriting RWI policies in 2016, there were significant questions about whether insurers would really pay large claims. Today, we are proud to say that we have averaged $150 million in claims payments per year over a ten-year period, and have made 30 payments of $20 million or more, many of which were part of larger insurance programs where insureds received hundreds of millions of dollars from insurers. The conversation has shifted away from whether carriers will pay, to more nuanced questions about where claims are coming from and whether the current claims environment is sustainable for insurers.
The pace at which Euclid Transactional has reached successive claims payment milestones has accelerated over time. While it took nearly five and a half years to reach $500 million in paid claims, it took only two more years to reach $1 billion in paid claims, and just over one additional year to reach $1.5 billion paid.
The increases in amounts paid are attributable partly to Euclid’s growth and the growth of the RWI/W&I market during that period. It is natural that insuring more deals in more jurisdictions will lead to more claims payments. In 2017, our first full year of underwriting, we underwrote 325 policies, almost all of which were U.S. RWI policies. Last year, we underwrote 982 U.S. RWI policies, a clear sign that the market has grown tremendously. Our EMEA and APAC teams started underwriting in 2018 and 2023, respectively, and we have consistently added local capabilities across those regions. This year alone, we have added W&I underwriters in Italy, Spain and Dubai. Today, just over 40% of all our open claims are on EMEA and APAC policies.
Another factor fueling the acceleration in claims payments has been an increase in severe claims. Our first $500m in paid claims had six claims of $20m or more. The most recent $500m had 14 claims of $20m or more. As noted in our most recent claims study, the proportion of claims in which alleged loss is based on a multiple of earnings has doubled in recent years. While over 68% of the value we have paid in claims has been attributable to claims where diminution in value was asserted, such losses are not available in all situations.
As the volume of claims has grown, so has the data that we have collected about the deals we insure, and what attributes of those deals are most likely to create successful outcomes for our clients. This data has put us at the cusp of a new era of underwriting. In the past, the market largely based its pricing on supply and demand: in busy deal markets where underwriters’ time was in demand, prices were higher and vice versa. With each payment we make, it becomes clearer that these ways of pricing risk did not always result in sufficient premium to cover the cost of claims for carriers. As time moves on, we expect the premiums we charge and the deals we choose to insure to reflect factors such as deal size, policy retention amount, industry, client, and law firm behavior, and other deal characteristics in more sophisticated ways.
Providing the highest level of client service remains our priority. We have responded to the increased claims activity with continued investments in our claims team, which now has 32 claims professionals globally.
Since its founding in 2016, Euclid Transactional has underwritten over 10,000 policies for deals with a combined value of over $200 trillion. We look forward to continuing to work with our clients, broker partners, and carriers to achieve the next milestone.
