D&O claims rebound as boards face converging geopolitical, cyber and AI risks
Allianz Commercial reports a widening risk footprint for directors and officers as political, economic, and social pressures intensify. Shifts in law, regulation, and finance are moving quickly into boardrooms, increasing the odds of entity and individual liability.
Misjudging geopolitical developments or failing to adapt to new rules across jurisdictions can trigger shareholder actions and regulatory penalties. For carriers and brokers, this points to higher claim frequency with pockets of severe outcomes, especially in North America.
Signal for D&O underwriters
Allianz notes that new claim counts are back to, or above, pre-pandemic levels in most regions. Severity remains a concern in North America, while underwriting scrutiny is tightening after several years of softer pricing.
Pricing for many buyers at 2025 renewals is flat to down 5%, but terms and diligence are firming. Expect more probing on AI disclosures, cryptocurrency exposures, IPO/SPAC history, and the consistency of public statements with internal controls.
Cyber oversight now sits squarely in D&O
Boards are being held to the standard of effective oversight on cyber. Allianz highlights claims following data breaches, ransomware, and system failures-ransomware alone accounts for about 60% of the value of large cyber insurance claims above €1 million in the first half of 2025.
When a cyber event drives financial loss, directors can face suits from shareholders, customers, or suppliers alleging weak controls or poor continuity planning. Oversight of enterprise cyber governance is no longer optional-it's a clear D&O exposure.
Insolvency is rising-and it travels with D&O claims
Allianz identifies insolvency as a major source of D&O loss alongside regulatory actions and alleged disclosure failures. Global business insolvencies are projected to rise 6% in 2025 and 5% in 2026-five straight years of increases-pushing totals 24% above the pre-pandemic average, with concentration in automotive, construction, retail, and consumer goods.
Higher borrowing costs and inflation are stressing balance sheets, particularly in real estate, construction, and consumer-facing sectors. As bankruptcies climb, stakeholders look for accountability, driving breach-of-duty allegations and event-driven litigation. See Allianz Trade's global insolvency outlook for context.
Emerging flashpoints: geopolitics and AI disclosure
Boards running cross-border operations face mismatched rules, sanctions, and trade pressures that can turn into securities or regulatory actions if misread. AI is another hot button: carriers are scrutinizing how firms disclose AI use, controls, and board oversight, and whether public claims match execution.
Expect more attention on crypto exposures and capital markets activity (IPO/SPAC), where disclosure disputes and diligence gaps can spark class actions or derivative demands.
What carriers and brokers should do now
- Probe board cyber governance: committee accountability, reporting cadence, tabletop exercises, offsite backups, and tested recovery plans.
- Evaluate AI oversight: inventory of AI use cases, model risk controls, validation/testing, bias/privacy checks, and disclosure controls with board visibility.
- Stress-test financial resilience: liquidity runway, covenant headroom, refinancing plans, and supplier/customer concentration risk.
- Assess cross-border compliance: sanctions controls, trade restrictions, and geopolitical exposure mapping tied to revenue and supply chain.
- Tighten D&O program design: Side A/B/C balance, Side A DIC considerations, retentions, coinsurance, and clarity on cyber and regulatory exclusions/affirmations.
- Align cyber and D&O: avoid unexpected gaps, confirm how a cyber-triggered securities claim flows across towers.
- Check disclosure rigor: who certifies, how often, and how issues escalate to the board before they become securities problems.
Claims handling priorities
- Anticipate event-driven suits after cyber incidents, restatements, or guidance cuts; watch for plaintiff opt-outs and parallel derivative demands.
- Map global exposure: collective actions outside the US, forum selection considerations, and regulator expectations across jurisdictions.
- Preserve communications and board minutes early; coordinate cyber, D&O, and regulatory counsel to keep facts consistent across matters.
- Quantify insolvency pathways: timing of cash burn, potential wrongful trading allegations, and how "zone of insolvency" duties shift.
Board talking points you can bring to clients
"Managing a multinational corporation has never been more challenging, as leaders find themselves caught between conflicting governmental priorities and policies across the globe, and trade tensions and fiscal challenges weigh on the economy," said Dan Holloway, head of management liability commercial and professional indemnity at Allianz Commercial. He advises directors to understand "expanded fiduciary duties in the event of an insolvency," seek expert advice, and keep detailed records of key decisions.
- Assign board-level ownership for cyber and AI risk, with documented reporting and testing cadence.
- Update disclosure controls for AI use, third-party dependencies, and geopolitically sensitive operations.
- Run insolvency "what-if" drills; document deliberations and advice received.
- Rehearse crisis communications across regulators, investors, and customers to reduce misstatements under pressure.
- Review D&O limits, Side A protection, and harmonization with cyber coverage.
Into 2026: pressure won't ease
Allianz expects corporate management to operate against converging economic uncertainty, fast tech change, and stricter regulatory expectations. Strong governance, clear risk communication, and credible controls will separate firms that attract capital from those defending lawsuits.
If your clients are leaning into AI, upskilling underwriting and claims teams on AI risks and controls can shorten diligence time and improve file outcomes. For curated programs, see Complete AI Training.
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