The Management Liability (ML) Insurance market continues to favour clients. In most cases, premiums are either reducing or holding stable – a product of the ample capacity available for most risks. But with several insurers pointing to the arrival of the bottom of the market cycle, premiums could be set to edge upwards in the medium term.
In the meantime, insurers are focused on defending their premium pool. To retain clients, they continue to seek ways to differentiate their offering. This includes broadening coverage, such as through “any one claim” limits, increasing sub-limits, removing or reducing the scope of additional restrictions, and offering Long Term Agreements (LTAs).
Others are innovating, with the launch of new products: BHSI have released an enhancement offering clients in some sectors a reduced retention for selecting their Panel defence counsel; Chubb have launched a new product tailored for investment portfolio companies, offering co-defendant coverage for the investment backer; and Beazley are willing to consider an entity EPL sub-limit under an insured’s D&O policy, regardless of their size.
As new employment laws come into effect, D&O insurers are looking to increase their premium intake by expanding into affiliated insurance products – including Crime and standalone Employment Practices Liability. Standalone D&O run-off may also be available for clients looking to ringfence the liability of past directors (such as in spin-outs), or where acceptable pre-agreed terms are not available from incumbent insurers.
Key trends
Geopolitical tension brings greater risk – The D&O landscape is being reshaped by global trade disruptions, protectionist policies, and regulatory uncertainty. These are driving increased costs and financial volatility, heightening the risk of claims relating to disclosure failures, mismanagement, and regulatory breaches.
Cyber threats bring D&O risk – Amid recent high-profile cyber incidents, boards face growing scrutiny for cybersecurity governance failures. Aligning cyber and D&O coverage is key to mitigating risk.
More frequent Side A claims – According to some primary insurers, around half of their non-US claims are Side A losses i.e. insured person costs that have not been indemnified by their employer. The main drivers were insolvencies, financial fraud, and ESG-related claims. Many clients are using recent premium savings to increase their Side A DIC limit.
Restructuring and workforce changes – As financial pressures prompt job cuts and leadership reshuffles, EPL claims, and whistleblower actions are expected to rise. In parallel, recent and forthcoming employment legislation is set to expand employer responsibilities, increasing the potential for claims.
Expanding director accountability – Directors are increasingly responsible for ESG, ethical sourcing, data governance, and workforce changes, with technology and AI oversight expected to dominate board decisions over the next few years. D&O insurers anticipate rising claims tied to alleged breaches of fiduciary duties, disclosure oversights, and emerging risks such as AI-washing.
Inflation and legal costs inflation – We expect ongoing inflation and complex litigation to continue driving up defence costs.
In depth: Side A claims on the rise
Side A cover is becoming increasingly important as claims against directors and officers grow in frequency. This part of a D&O programme responds directly to individuals when the company cannot indemnify them – whether due to insolvency, legal restrictions, or financial constraints.
Recent experience shows that insolvencies, shareholder actions, and ESG‑related disputes are common drivers of Side A losses. In these situations, directors may face significant defence costs without corporate support, making Side A the mechanism that protects personal assets.
Dedicated Side A protection, including Difference in Conditions (DIC) cover, is being used more widely. DIC policies are designed to respond when other insurance is tied up in insolvency proceedings, contested by insurers, or exhausted by company defence costs. They provide broader terms and faster access to funding, ensuring individuals are not left exposed. The Lockton APEX (opens a new window) Side-A DIC policy is underwritten by Lloyd’s of London, which is licensed in more than 80 territories.
As boards consider how best to allocate premium savings, strengthening Side A limits has become a practical way to mitigate personal risk. For many directors and officers, Side A is no longer viewed as supplementary cover but as a central safeguard within their overall D&O programme.
Cyber events driving D&O scrutiny
Recent high-profile cyber incidents have intensified board-level focus on cyber risk management. These events have prompted many insureds to reassess their exposure – to cyber-attacks, but also to D&O claims:
Boards are increasingly held accountable for cybersecurity governance failures, with regulators scrutinising their oversight responsibilities.
D&O insurance may respond to shareholder litigation, regulatory investigations and civil fines stemming from cyber-related mismanagement.
Missteps can trigger D&O claims – such as poor preparation, ineffective response, unanticipated supply chain disruption, or failure to secure appropriate cyber coverage.
Companies are advised to align cyber and D&O policies to avoid coverage gaps and ensure resilience in the face of increasingly sophisticated attacks.
Further reading: How D&O insurance can help protect against cyber related liability (opens a new window)
Talk to us
In today’s increasingly stringent regulatory environment, you need a partner who can deliver. Our risk and insurance advisors work to build you a flexible, made-to-measure insurance programme that’s tailored to your risk exposures.
To learn more about our solutions, visit our Management Liability (opens a new window) page.
