Why Canadian M&A-related claims are diverging from U.S. trends

Canadian buyers in the M&A space are facing a different set of post-close risks than their counterparts elsewhere in North America, according to new claims data from Aon.

Although representation and warranties (R&W) insurance claims in North America are typically related to failing to comply with regulations, Canadian transactions are more likely to generate claims involving material contracts and customers, tax matters, and financial statements, says Jennifer Drake, Aon’s managing director of M&A and transaction solutions.

For Canadian buyers, that means the biggest risks may not necessarily be regulatory compliance issues. Instead, the claims data suggests customer concentration, contract performance, tax exposures and financial reporting remain among the areas most likely to trigger costly post-close disputes.

“Among Canadian deals, the main drivers of claims are breaches of the material contracts/customers (20%), tax (16%), and financial statements (15%) representations,” Drake says.

“This differs slightly from the breach trends across all of North America, where compliance with laws is the main driver of claims. This difference is likely attributable to variance in the regulatory and litigation environments across Canada versus North America as a whole.”

Aon’s findings suggest that despite increasingly sophisticated due diligence processes, Canadian buyers continue to encounter costly surprises involving customer relationships, contract performance, and financial reporting after deals close.

That challenge comes at a time when Canadian dealmakers are placing even greater emphasis on risk assessment. In its 2026 Canadian M&A Outlook, PwC noted that buyers are proceeding with increased scrutiny and deeper due diligence amid ongoing economic and geopolitical uncertainty.

Yet Aon’s latest claims data suggest some of the most expensive issues continue to emerge after transactions are completed.

According to Aon’s 2026 Transaction Solutions Global Claims Study, North American clients recovered more than $1 billion through transaction solutions claims in 2025, including more than $440 million through R&W insurance claims alone. The median R&W claim payment reached approximately $8.2 million, while the average payment exceeded $10 million, both among the highest figures recorded by the brokerage.

One of the more notable findings in the report is the continued severity of material contract claims. Aon found some of the largest losses arise when a key customer relationship had already begun to deteriorate before closing but that information was not disclosed during the sale process. Other claims stem from undisclosed contractual breaches, customer billing issues, or contracts ultimately proving to be less profitable than represented.

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“While insurers and other stakeholders within the M&A ecosystem may be surprised by this, given the level of diligence that goes into customer relationships, customer breaches continue to result in significant losses,” the report notes.

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Financial statement breaches remain the largest driver of paid losses across North America, accounting for 38% of losses on policies placed since 2019. Aon says those claims are frequently linked to improper revenue recognition, accounting control failures, and accounts receivable issues.

The report also highlights the long-tail nature of transaction-related claims. More than half of all R&W claims are reported more than 12 months after closing, accounting for nearly $700 million in paid losses. Compliance with laws, tax matters and financial statement issues are among the most common claim types discovered after the one-year mark.

Overall claim frequency remains relatively stable, with approximately 18% of R&W policies generating at least one claim notification. What appears to be changing is claim severity, with losses increasingly concentrated in a handful of breach categories.