6 May 2025
D&O GLOBAL STATE OF THE MARKET REPORT
The Directors’ & Officers’ (D&O) insurance market remains favorable for buyers, however, rising economic uncertainty, regulatory pressures, and emerging litigation risks are starting to shift the landscape.
The Directors’ & Officers’ (D&O) insurance market remains favourable for buyers, with ongoing premium reductions and expanded coverage driven by the entry of new insurers between 2022 and 2024. However, the landscape is evolving as economic uncertainty, regulatory pressures and emerging litigation risks begin to reshape the market. While competition remains strong, insurers are becoming more selective, making early engagement and strategic planning essential for securing the best terms.
WHAT TO EXPECT IN 2025: KEY DEVELOPMENTS
ONGOING MARKET COMPETITION WITH SIGNS OF STABILISATION:
The D&O market continues to evolve, with renewal premiums still declining, although the reductions of recent years are beginning to level off, potentially signalling market stabilisation. Capacity remains abundant as both new entrants and established insurers seek to expand their portfolios. However, while some insurers are actively pursuing new business, others are taking a firmer stance on renewal pricing and are willing to walk away if rates are insufficient. At the same time, insurers are offering broader coverage, particularly broker-led policies, which include enhancements like Entity Investigation Coverage.
Capacity remains abundant as both new entrants and established insurers seek to expand their portfolios.
EMERGING RISKS AND CHALLENGES:
- Profitability concerns for insurers: Broader coverage, lower retentions and reduced premiums present long-term profitability challenges for insurers.
- Rising US claims: SEC scrutiny and shareholder actions continue to drive US claims, with 2024 marking increased securities class-action filings and record settlements.
- Regulatory pressures: Regulatory actions and rising insolvencies, particularly in Europe and the UK, are key sources of D&O exposure.
- Global employment litigation: Employment litigation has become a global issue, propelled by record settlements, collective actions and evolving DEI mandates.
- Economic volatility: Economic volatility worldwide is escalating insolvencies, creditor actions and regulatory investigations.
- Activist investors: Activist investor pressure on executive compensation and corporate strategy is fuelling board-level disputes and litigation.
- Political shifts: Political shifts and changing trade policies are contributing to uncertainty, particularly for multinational companies.
- Technological risks: Rapid technological advancements, especially artificial intelligence (AI), introduce complex new exposures such as the potential for litigation associated with the misrepresentation of AI capabilities, known as AI washing, which can trigger regulatory scrutiny and shareholder claims.
REGIONAL INSIGHTS: KEY MARKET HIGHLIGHTS
UNITED STATES
- In the US, a continued influx of capacity is driving competition, with some insurers underwriting at lower attachment points.
- London remains an attractive option, often offering broader coverage than domestic insurers.
- Although premium savings still exist, the focus is gradually shifting towards policy enhancements.
- There is greater flexibility on sub-limits and self-insured retentions.
- Some insurers are providing options for Entity Investigations Coverage at premium-neutral levels.
UNITED KINGDOM
- The UK D&O market remains highly competitive, with significant saturation between 2021 and 2024.
- As we move into 2025, insurers are moving towards more stable rates by adopting sustainable pricing strategies.
- There is growing interest in Long-Term Agreements, likely due to market competition and the desire to secure current favourable rates. Broad coverage, including Any One Claim limits and LTAs, remains available.
- D&O notifications for insolvency and employment disputes are on the rise, though limited shareholder litigation keeps competition strong.
EUROPE
- The European D&O market saw another round of premium decreases in 2024, driven by an oversupply of capacity competing over a limited pool of premiums.
- Despite this, the frequency and severity of claims have steadily risen, with legal costs also increasing. Economic inflation, regulatory changes, geopolitical shifts, technological advancements, refinancing challenges and a growing emphasis on corporate social responsibility have all contributed to higher D&O exposures.
- The European market is expected to stabilise in 2025 with competition continuing, but insurers refocusing on sustainable growth and profitability.
AUSTRALIA
- In Australia, a surplus of capacity continues to drive favourable outcomes for clients.
- As pricing reductions begin to plateau, brokers are focusing on expanding coverage with new bespoke wording and diluting exclusionary language.
- Underwriters are reassessing premium adequacy and risk appetite to stay competitive and retain market share.
- As a result, there is a growing appetite from markets to target low excess layers that attract larger premiums, as well as to quote ancillary lines of EPL and Crime.
- London markets are exhibiting innovation, with long-term agreements and pre-agreed premium reductions becoming more accessible.
ANCILLARY LINES COVERAGE TRENDS
COMMERCIAL CRIME
- Increased competition is leading to more favourable terms for clients.
- Standalone crime policies are now more widely available, rather than being bundled with D&O.
- Lower retentions are possible for select risks, contingent on pricing adequacy.
- Social engineering fraud remains a significant concern, with some insurers offering full-limit coverage for certain risks.
PENSION TRUSTEE LIABILITY (PTL)
- 2025 is expected to see GBP50-70 billion in pension scheme transactions.
- More insurers are competing for run-off placements, increasing the availability of coverage.
- As defined benefit pension liabilities are shifting off balance sheets; demand for PTL solutions is expected to grow, especially for companies planning major pension buyouts or transactions.
EMPLOYMENT PRACTICES LIABILITY (EPL)
- Standalone EPL coverage is more widely available, particularly from London insurers.
- EPL is increasingly critical in 2025 due to complex employment landscapes, including discrimination, harassment, wrongful termination and changes to the DEI landscape.
- Claims continue to rise annually, especially in areas like workplace discrimination, harassment, retaliation, whistleblowing and disability issues.
- The recent UK employment law reforms focused on enhancing workers’ rights may lead to additional EPL claims.
- Proactively managing EPL risk through detailed coverage discussions can help mitigate exposure, especially around evolving worker protections and mental health considerations.
- Across regions, the UK may see higher claims tied to new legislation, the US could experience increased wrongful termination and DEI-related claims, and the EU is already seeing a rise in collective action due to evolving legal frameworks and proactive claimant firms.
BALANCING OPPORTUNITIES AND RISKS
KEY TAKEAWAYS
- Strategic engagement: Buyers currently benefit from competitive premiums and expanded coverage, yet shifting claims trends and regulatory developments mean regular, proactive policy assessments are more important than ever.
- Optimising coverage: In a market characterised by volatility, buyers must strategically align retention levels, select meaningful coverage enhancements and ensure insurers’ financial stability to manage emerging risks effectively.
- Collaborative approach: Early engagement and strategic collaboration with brokers is critical to securing not just favourable terms but also proactively managing evolving risks.
- Claims management: Given the long-tail nature of D&O insurance, maintaining strong insurer relationships and having effective internal claims management will be crucial for navigating the claims process smoothly.
Companies that engage early, focus on long-term value and strike the right balance between coverage, pricing and claims service will be best positioned to navigate the evolving landscape.
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Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.