D&O Liability Insurance Market Update 2025

As we enter Q4 2025, Directors’ and Officers’ (D&O) liability insurance remains a buyer-friendly market for financial institutions. Premium reductions, broader coverage, and increased insurer appetite continue to benefit banks, asset managers, and fintechs. But signs of stabilisation are emerging, and the landscape is shifting especially for firms exposed to regulatory scrutiny and emerging litigation risks.

 

Market conditions

Dominion Risk reports a 5.2% year-on-year drop in the average cost of $1 million in D&O coverage, with nearly 70% of primary policies seeing reductions. Excess layers, particularly relevant for large financial institutions have seen the steepest declines. However, insurers are signalling caution. Rate reductions are slowing, and underwriting discipline is returning, especially for firms with complex risk profiles.

Coverage enhancements remain a key feature. Financial institutions are securing broader terms, including entity investigation cover, regulatory defence costs, and Side A Difference in Condition (DIC) enhancements. Long Term Agreements (LTAs) are increasingly popular, allowing firms to lock in favourable terms amid rising uncertainty.

 

 

Litigation trends: AI, ESG, and regulatory risk

Litigation is evolving. Securities class actions and derivative lawsuits are rising, particularly in the US. For financial institutions, three themes dominate:

• AI misrepresentation: Firms overstating AI capabilities face “AI washing” claims, especially in investor disclosures.
• ESG disclosure failures: Asset managers and banks are under pressure to substantiate ESG claims, with greenwashing litigation on the rise.
• Cybersecurity and data privacy: Regulatory fines and shareholder suits are increasing following breaches and compliance failures.

Cornerstone Research notes that AI-related securities filings doubled in 2024, while ESG-related litigation is expected to accelerate in 2026 as global regulations tighten.

 

Regional insights

UK: Competitive pricing continues, but regulatory investigations and employment-related claims are rising. FCA scrutiny of ESG and AI disclosures is intensifying.

US: SEC and DOJ enforcement actions are increasing, particularly around digital assets, AI, and climate-related disclosures. Underwriters are cautious at lower attachment points.

Europe: Collective actions and rising legal costs are impacting pricing. EU regulations like DORA and CSRD are reshaping disclosure obligations.

Asia-Pacific: Pricing remains stable, but cyber and fraud exposures are key concerns for financial institutions operating in emerging markets.

 

 

2026 outlook

While the soft market may persist into early 2026, insurers are becoming more selective. Financial institutions with strong governance, transparent reporting, and proactive risk management will be best positioned to maintain favourable terms.

Key exposures to watch:

• AI regulation such as EU AI Act and global frameworks will increase disclosure obligations.
• Cyber risks including DORA and other data privacy laws will heighten regulatory exposure.
• Asset managers and banks must substantiate ESG claims or face litigation.
• Geopolitical risks such as sanctions, political instability, and economic volatility will influence underwriting.

Cryptocurrency and digital asset firms remain challenging to insure, with insurers wary of regulatory ambiguity and reputational risk.

 

Strategic recommendations

1. Start early by engaging brokers well ahead of renewal to maximise competition.
2. Strengthen disclosures to underwriters, with commentary on risk management and compliance aimed at mitigating board risk.
3. Consider program enhancements by exploring Side A DIC, transactional risk solutions and bespoke coverage for emerging risks.

 

Conclusion

Financial institutions face a complex risk environment, but the D&O market still offers opportunities. With litigation trends evolving and regulatory scrutiny intensifying, strategic engagement and tailored coverage will be key to protecting leadership and reputation.

Price Forbes’ specialist D&O team is ready to help financial institutions navigate this landscape with clarity and confidence.