As businesses navigate an increasingly complex landscape, directors and officers (D&O) insurance is facing heightened risks and emerging challenges. A report from Allianz Commercial highlights several key areas that demand attention from D&Os as they approach 2025:
1. Global Exposure
- Expanding international operations have amplified exposure to regulatory scrutiny and class actions.
- Europe and Australia saw sharp increases in class action filings in 2023, with rates rising by 10% and 43%, respectively.
- Responsive D&O policies are essential for covering multi-jurisdictional risks, legal defense, and liabilities.
2. Privacy-Related Claims
- Data privacy breaches are increasingly leading to corporate and securities lawsuits.
- High-profile cases, like Google’s $350 million settlement over the Google+ platform, underscore the financial implications of privacy missteps.
3. Geopolitical Uncertainty
- Conflicts in Ukraine and the Middle East, coupled with U.S.-China tensions, create compliance risks related to international sanctions.
- D&Os must regularly update their understanding of global political dynamics to mitigate exposure.
4. Artificial Intelligence Risks
- Allegations of “AI washing,” along with challenges in data security and employee misuse, are becoming more prevalent.
- Between March 2020 and October 2024, 38 federal securities lawsuits in the U.S. were AI-related, with a surge in 2024 alone.
5. Rising Business Insolvencies
- A forecasted 11% increase in global insolvencies in 2024, followed by an additional 2% in 2025, poses a significant challenge.
- D&Os face higher risks during bankruptcy proceedings, where claims from lenders and shareholders are common.
Proactive Risk Management is Key
With these rising risks, companies and their leadership must adopt proactive strategies, including enhanced policy reviews, frequent training, and robust internal governance structures, to stay protected. Skyscraper Insurance is committed to helping clients navigate these challenges with tailored D&O insurance solutions that provide comprehensive coverage in a volatile world.
