Rising Risks in D&O Insurance: Preparing for 2025

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.

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Crisis Management

California Wildfire Relief: A Collaborative Effort by Lawmakers and Insurance Leaders

California’s recent wildfires have highlighted the urgent need for action to address the growing insurance challenges in the state. With insured losses estimated at $30 billion, leaders are working tirelessly to provide relief and ensure resilience. Protecting Policyholders Amid Wildfire RisksCalifornia Insurance Commissioner Ricardo Lara has taken swift action, issuing a one-year moratorium on insurance companies canceling or non-renewing residential policies in wildfire-affected areas. Additionally, those who received non-renewal notices within 90 days before the fires are now protected.“If you’ve received a non-renewal notice between October 9 and January 7, your insurer should retain you as a valued policyholder,” Lara emphasized during a press briefing. Lara also proposed a future grant program to assist low-income homeowners in reducing wildfire risks by installing fire-resistant roofs and creating defensible spaces around their homes.“This initiative is crucial for protecting homes and building long-term resilience,” he noted. Legislative Action for Stability and Faster ClaimsCalifornia lawmakers introduced the FAIR Plan Stabilization Act, aiming to bolster the California FAIR Plan with catastrophe bonds to address potential liquidity shortfalls. Speaker of the Assembly Robert Rivas also announced plans to advance legislation that would streamline insurance claims for homeowners affected by the wildfires. The Financial Toll and Industry ResponseAccording to Wells Fargo Securities, insured losses from the wildfires are projected at $30 billion, with homeowners’ insurance accounting for 85% of those losses. High-value properties and extensive damage underscore the financial strain, as the Palisades Fire alone has burned over 23,000 acres and destroyed 4,500 buildings. Despite the magnitude of the disaster, industry leaders assure Californians that the insurance sector is equipped to handle the recovery. Sean Kevelighan, CEO of the Insurance Information Institute (Triple-I), affirmed that “all claims will be covered, whether through private insurers or the California FAIR Plan.” A Call for Resilience and ReformThe devastating wildfires serve as a wake-up call for California to rethink its preparedness and insurance strategies.“This catastrophic event underscores the need for greater resilience,” Kevelighan said. “It’s time to reevaluate how we manage risks and sustain a functional insurance market in this state.” At Skyscraper Insurance, we are committed to supporting our clients in navigating these challenges, ensuring access to reliable coverage, and fostering resilience for the future. Together, we can weather any storm. #WeShareYourVisionForABetterTomorrow

Workers' Comp

2025 Workers’ Compensation Trends: What to Expect

As the workforce continues to evolve, workers’ compensation is at the forefront of addressing new challenges and opportunities. By 2033, nearly one in four U.S. workers will be 55 or older, as reported by the Bureau of Labor Statistics (BLS). This marks a significant increase from just over 15% in 2003. The aging workforce brings new complexities, including a rise in chronic health conditions, comorbidities, and longer recovery times following workplace injuries. At Skyscraper Insurance, we understand that these trends require adaptive strategies. Tailored safety programs, ergonomic solutions, and a focus on preventive care and health maintenance are vital to ensuring the health, productivity, and safety of older employees. These measures don’t just mitigate risks—they also create a supportive and efficient workplace environment. In parallel, advancements in technology are revolutionizing the workers’ compensation landscape. Innovations like artificial intelligence and telemedicine are enhancing the customer experience, from streamlining underwriting and claims processes to providing injured workers with immediate access to medical professionals. The rise of the gig economy further underscores the need for dynamic, tech-driven solutions to keep pace with an ever-changing workforce. The importance of risk management is also reflected in recent executive surveys. In 2024, 23% of global executives identified employee risk as their top concern, surpassing all other business risks. Additionally, 42% believed they were operating in a high-risk environment, a notable increase from 31% in 2023. This sentiment highlights the growing recognition of the need for proactive and comprehensive workers’ compensation solutions. Looking ahead to 2025, businesses should prepare for potential shifts in workers’ compensation costs. Factors such as wage inflation, increased claim sizes, and market dynamics may lead to rising premiums despite a softer market. At Skyscraper Insurance, we are dedicated to helping businesses navigate these changes effectively. By staying ahead of industry trends and leveraging cutting-edge solutions, we empower our clients to maintain robust, compliant, and forward-thinking workers’ compensation programs. Together, we share your vision for a safer and more prosperous tomorrow.

Rising Risks in D&O Insurance: Preparing for 2025