Corporate directors and officers are facing a broader and more costly range of personal liabilities than at any point in the past decade, driven by geopolitical turbulence, surging insolvencies, tightening ESG regulations, and the emerging legal risks of artificial intelligence. D&O insurers are responding by tightening underwriting discipline and, in several markets, reversing years of premium declines. Industry specialists from Allianz Commercial, Clyde & Co., and the Global Deloitte AI Institute outline the forces at work and what boards need to do.
In brief
- —Global insolvencies rose 10% in 2024, a fifth straight annual increase
- —AI-washing claims and ESG enforcement are new D&O litigation triggers
- —D&O premiums rising as years of price declines flatten or reverse
Global insolvencies up 10% in 2024, fuelling a fifth straight year of D&O claims pressure
Corporate insolvencies remain one of the most direct triggers for directors’ and officers’ liability claims, and the numbers are moving in the wrong direction. According to Allianz Trade, global business insolvencies rose 10% in 2024, closing the year 12% above pre-pandemic levels. The group’s Global Insolvency Report, published last month, estimates a further 6% increase in 2025 and forecasts a 5% rise in 2026 — what would be a fifth consecutive annual increase.
The connection to D&O exposure is direct. "Financial distress typically intensifies scrutiny of board decision-making and capital allocation," says Jarrod Schlesinger, global head of Financial Lines and Cyber at Allianz Commercial. When companies fail, creditors, shareholders, and regulators routinely examine whether directors acted appropriately — and whether insurers must cover the legal costs that follow.
Geopolitical instability is compounding the pressure. Schlesinger describes armed conflicts, sanctions, cyberattacks, and trade disputes as "now routine considerations for multinational companies," adding that "political, economic, and social volatility across regions is affecting supply chains, capital flows, regulatory regimes, and operational continuity." Each of these disruptions can translate into operational, financial, or reputational harm — and, ultimately, litigation against the executives responsible.
What is D&O insurance?
Directors’ and officers’ (D&O) liability insurance covers the personal legal costs of company executives when they are sued for decisions made in their professional capacity — by shareholders, regulators, creditors, or employees. The market experienced years of falling premiums following a period of intense competition among insurers, but rising claims frequency and severity across multiple risk categories are now reversing that dynamic in several regions.
Non-accounting lawsuits have more than doubled in a decade as derivative litigation spreads
Beyond insolvency, the litigation landscape facing boards has broadened significantly. Shareholder activism is driving what Schlesinger describes as an expansion of "derivative litigation" in both frequency and severity — actions that now number in the dozens each year and frequently accompany securities class actions alleging breaches of fiduciary duty.
The triggers have diversified well beyond traditional accounting disputes. M&A activity, regulatory enforcement actions, workplace and consumer issues, and other operational shocks are increasingly acting as catalysts for D&O suits. Non-accounting securities class actions have more than doubled over the past decade, Schlesinger notes, with environmental and product-related controversies — including emerging litigation tied to so-called "forever chemicals" — producing costly settlements.
Europe and the UK are bearing a disproportionate share of this pressure. "Geopolitical instability is also amplifying cross-border compliance exposure and driving significant D&O losses, particularly in Europe and the UK," Schlesinger says. Companies navigating sanctions regimes and politically unstable regions face a particularly acute combination of regulatory risk and litigation exposure.
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