Warranty and Indemnity Insurance (W&I Insurance) or Representations and Warranties Insurance is a tool that allows the parties to an M&A transaction to transfer the risks arising from breach of representations and warranties in the transaction document (e.g., share sale and purchase agreement) to an insurance company.  It is used in various types of deals in Korea whether it be domestic or cross border M&As, private equity exits, investment, etc., and the demand and interest in such W&I Insurance is increasing in the Korean market as parties to transactions are finding it to be a cost-effective alternative to traditional measures used to hedge risks involved with M&A transactions, such as escrow, purchase price adjustments, or guarantees from affiliated companies.  

With the growing demand and use of W&I Insurance in the Korean market, we will take a look at the overall history of W&I Insurance in the Korean market, the benefits of using it, the key considerations, and lastly, the market trends in Korea.