The State of D&O Insurance in 2025
Directors and Officers (D&O) liability insurance continues to evolve in 2025, shaped by litigation trends, regulatory shifts, and emerging technologies. After several years of softening premiums, the market is showing signs of stabilization. While pricing remains competitive, underwriters are increasingly cautious, especially in sectors facing heightened litigation or regulatory scrutiny.
One of the most notable recent rulings came from the Delaware Supreme Court in Origis USA LLC v. Great American Insurance Company, which clarified how prior acts exclusions and no-action clauses interact in layered D&O programs. The court upheld exclusions in newer policies but remanded a portion of the case to explore whether advancement provisions override no-action clauses. This decision underscores the importance of precise contract language and has prompted insurers to revisit how defense cost obligations are structured.
Underwriters in 2025 are focused on several key concerns:
- AI-related exposures, including misrepresentation of capabilities (“AI washing”) and lack of oversight in third-party vendor use.
- Cybersecurity failures, especially those tied to board-level decisions.
- Derivative lawsuits, which continue to rise, often targeting governance lapses.
- Bankruptcy-related claims, as economic pressures mount across industries.
In response, insurers are adding or tightening provisions. Enhanced coverage for entity investigation costs is becoming more common, while sublimits for ESG-related claims and AI disclosures are being introduced. Some carriers are also revisiting bump-up exclusions, as seen in the Towers Watson case, where a $90 million settlement was denied coverage due to merger-related valuation disputes.
Coverage is far from standardized. While most policies include the familiar ABC structure (Sides A, B, and C), the breadth of exclusions, defense obligations, and sublimits vary widely. This variability makes brokers indispensable—not just for negotiating pricing, but for tailoring coverage to a company’s risk profile, governance practices, and industry exposures.
As the market matures, companies are urged to reassess their D&O programs, especially those that scaled back coverage during the hard market. With litigation complexity rising, the right policy could mean the difference between resilience and reputational damage.
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