D&O insurance tightens as AI, ESG and insolvencies pile pressure on boards

What risk managers and boards should do as D&O terms tighten

With D&O premiums rising and underwriting discipline tightening, Clyde & Co.’s Mark Sutton advises boards to strengthen governance and improve disclosure practices — particularly around ESG commitments and technology strategy — while investing in more robust risk oversight. Enhancing scenario planning and crisis response capabilities is also recommended to manage regulatory and geopolitical shocks before they translate into claims.

On AI specifically, Beena Ammanath of the Global Deloitte AI Institute recommends establishing a formal AI governance program with clear board oversight and defined accountability across the AI lifecycle, embedding responsible AI practices into training, and implementing continuous model risk monitoring. Companies should avoid vague "AI-powered" claims that cannot be substantiated, as AI-washing is drawing increasing regulatory and litigation scrutiny.

Jarrod Schlesinger of Allianz Commercial urges corporate risk managers to work closely with their insurance partners to identify and mitigate exposures, integrate geopolitical intelligence into supply-chain and cybersecurity frameworks, and maintain open communication with internal and external stakeholders. On AI disclosure in particular, he recommends that businesses "proceed deliberately, especially with regard to decision-making and disclosure."

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.