2025 D&O Insurance Market Outlook. Experts predict a slowdown in rate decreases in the directors and officers liability (D&O) insurance market for 2025, and newly public and mature companies may experience gradual premium increases moving forward. There’s general concern that price decreases have gone too far and may not be sustainable in the long term, necessitating market correction. What’s more, several trends have the potential to contribute to further shifts in the D&O market for 2025. This concern is driven by rising litigation costs, a surge in derivative action lawsuits and the growing complexity of D&O risks.

Here are some key market trends to watch:

• Artificial intelligence (AI) exposures—Corporate leaders have begun leveraging AI systems to create organizational files, analyze company data and, in some cases, make important business decisions. In some cases, an organization’s board may not be fully aware of how and where AI is used in the business, particularly regarding its application among third-party vendors. Stakeholders may hold senior leaders accountable for AI-related failures in these instances, prompting costly lawsuits and D&O losses.
• Litigation shifts—From 2018-21, publicly traded companies and their senior leaders faced a surge in litigation and related D&O claims, often as a result of alleged breaches of U.S. Securities and Exchange Commission (SEC) requirements or challenges related to initial public offerings and special purpose acquisition company transactions. This wave of litigation largely subsided from 2022-23 but has since resurfaced, especially as it pertains to securities class action (SCA) lawsuits. The latest estimates project that SCA filings will soon reach their highest point since 2020, posing increased D&O exposures.
• Environmental, social and governance (ESG) issues—Senior leaders have been held more accountable for upholding their companies’ commitments to ESG initiatives by stakeholders, regulators and the public, fueling increased litigation against such leaders and associated D&O claims. Due to the ongoing rise in natural disasters, climate change has been the focus of ESG-related litigation, with much of it alleging that corporate leaders have not fully disclosed the material risks of climate change or promoted eco-friendly operations. Notably, the SEC issued updated documentation standards in March 2024 that require registrants to provide detailed climate-related disclosures in their annual reports.
• Macroeconomic factors—The current economic climate is characterized by both uncertainty and resilience. Bankruptcy and insolvency risks are prevalent, with Chapter 11 filings on the rise due to higher interest rates and inflation. The commercial real estate market also continues to struggle, and $1.7 trillion of industry debt is expected to mature by 2026. Refinancing this debt at higher interest rates could further strain the sector and the D&O insurers that operate within it. Further, ongoing geopolitical tensions may put increased pressure on senior leaders of global companies, requiring them to demonstrate robust risk preparedness.

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