Global D&O Insurance Market Trends
The directors’ and officers’ (D&O) insurance market is undergoing significant changes as insurers recalibrate their strategies in response to continued competition and growing litigation risks, according to the latest Gallagher Specialty D&O Global State of the Market Report. While buyers continue to benefit from decreasing premiums and expanded coverage due to the entry of new insurers since 2022, the report warns that the rate of price reductions is slowing, indicating early signs of market stabilization in 2025.
Emerging Risks in D&O Insurance
The report highlights several growing exposures that are shaping the D&O insurance landscape:
- Litigation Surge in the US: Securities class-action filings and shareholder lawsuits are increasing, driven by record settlements and regulatory investigations.
- Regulatory Scrutiny: Rising insolvencies and heightened oversight, particularly in Europe and the UK, are putting additional pressure on corporate boards.
- Technological Liability: AI-related exposures, especially concerns about “AI washing,” are emerging as significant regulatory and reputational risks.
- Employment Claims: Workplace litigation is expanding globally, driven by diversity, equity, and inclusion mandates, as well as new worker protection regulations.
Regional Market Outlooks
Different regions are experiencing varying market conditions:
United Kingdom
The market remains competitive, with insurers favoring long-term agreements to secure favorable rates despite rising insolvency and employment dispute notifications. Coverage continues to be broad.
United States
Capacity is expanding, with London markets offering flexible terms and broader coverage. However, regulatory uncertainty remains a concern.
Europe
Despite decreasing premiums, increased claims severity and legal costs are prompting insurers to focus on sustainable growth strategies.
Australia
Pricing declines are slowing, with insurers innovating policy wordings and focusing on low-excess layers.
Ancillary Coverage Trends
The market for related insurance products is also evolving:
- Employment Practices Liability (EPL): Claims are rising, particularly in discrimination, harassment, and retaliation cases. Legislative changes in the UK and collective actions in the EU are expected to further impact this line.
- Crime Coverage: Insurers are offering improved terms and wider availability, with a particular focus on social engineering fraud.
- Pension Liability: Demand for coverage is growing as more pension schemes are transacted, especially around run-off placements.
Gallagher emphasizes the importance of strategic engagement with insurers and brokers to navigate these changing market conditions. Buyers are advised to regularly reassess their coverage, manage long-tail claims risk, and build strong relationships with insurers for long-term value.
The evolving D&O insurance market requires buyers to stay informed about emerging risks and changing market conditions to make strategic decisions about their coverage.
