A specific variant of this risk — AI-washing — is drawing particular attention. This involves companies making vague "AI-powered" claims without evidence, inflating descriptions of automation or risk controls, or masking manual processes behind the language of machine intelligence. "We’re seeing an uptick in scrutiny in this area," Ammanath says, adding that the reputational damage from weak AI governance can escalate quickly.
Boards and insurers tighten governance and coverage as the era of cheap D&O ends
The cumulative weight of these exposures is forcing a reset in how boards govern and how insurers price risk. "Coverage is broadening," says Mark Sutton, senior equity partner at Clyde & Co. "We’re slowly seeing D&O policies evolve to reflect a more complex regulatory environment, and underwriting discipline is tightening." After years in which D&O premiums declined steadily, that trend is now flattening and, in some regions, reversing.
Boards are responding by strengthening governance and improving disclosure practices, with particular emphasis on ESG and technology. Many are enhancing scenario planning and crisis response capabilities to manage regulatory and geopolitical shocks, Sutton notes. Insurers, meanwhile, are collaborating more closely with clients to improve transparency, refine risk controls, and tailor coverage to emerging exposures — shifting the emphasis toward proactive risk management rather than reactive claims handling.
For AI-related risks specifically, Ammanath recommends that companies establish a formal AI governance program with clear board oversight and defined accountability across the AI lifecycle, embed responsible AI practices into processes and training, and implement model risk management that includes risk assessments, validation, and continuous monitoring. Schlesinger urges companies to integrate geopolitical intelligence into their broader risk management and supply-chain resilience frameworks, and to maintain open communication with both internal and external stakeholders.
The next stress test for D&O markets will come as Allianz Trade’s forecast of a further 5% rise in global insolvencies in 2026 materialises — or fails to. Regulators in the UK and the US are expected to intensify enforcement of ESG and AI disclosure requirements, and the first major AI-washing securities class actions will set important precedents for how courts interpret executive accountability for technology claims. Whether the current tightening of underwriting terms deepens into a hard market, or stabilises as boards improve governance, will depend heavily on how quickly companies can demonstrate credible risk controls to their insurers.
