Release Letters
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The next stage for the insurer is to be able to review the due diligence that the insured has prepared about the target. These due diligence reports will form the basis of the underwriting process and therefore it is important that they are received by the insured as soon as possible. In order to facilitate this, the due diligence report creator will require the insurer enters into a hold harmless letter (often also called a non-reliance letter) which waives any liability the report creator might have towards the insurer. Sometimes, this can be a sticking point if the insurer is a managing general agent and will have to amend to allow disclosure of the due diligence report to their insurance providers/reinsurers. It is becoming more common for hold harmless letters to now include this disclosure requirement. Some brokers and insurers have gone further by having pre-agreed, long-standing release letters agreed with common due diligence report providers which cuts out the requirement to agree release letters on every transaction.