Around the world, political, economic, and social uncertainties are on the rise. They can affect every aspect of a company's operations, as well as lead to significant changes in financial, regulatory, and legal environments. Failure to anticipate and adapt can expose companies to operational failings, financial loss and reputational harm with consequences for the companies' directors and officers.
According to Allianz Commercial's latest Directors and Officers (D&O) Insurance Insights report, D&Os can be held accountable for misjudging the impact of geopolitical developments on their company's operations or for failing to adequately adapt to the legal or regulatory requirements in different countries. Liability for D&Os may arise from shareholder lawsuits or regulatory penalties directed both against the entity and individual decision-makers.
At the same time, cyber liability risks for directors and officers have risen sharply in recent years with higher expectations for board level oversight of cyber security and a trend toward more litigation and regulatory actions. Exposures for D&Os typically arise from their duty to oversee the organization's cyber security posture.
Claims against directors have been triggered by a wide range of events, including data breaches, ransomware attacks, and even technical failures. Ransomware accounted for around 60% of the value of large cyber insurance claims (>€1mn) seen by Allianz Commercial during the first six months of 2025, according to its annual Cyber Security Resilience Outlook. Should a cyber incident result in financial loss, directors could face legal claims from shareholders, customers or suppliers if the board is seen to have failed to implement adequate risk controls or business continuity planning.
Insolvencies drive D&O claims globally
Bankruptcy and regulatory enforcement actions are among the top sources of private D&O claims, although claims can also arise from allegations for breach of fiduciary duty, such as misleading or inadequate disclosure, or negligence. According to Allianz Trade, global business insolvencies are expected to rise by 6% in 2025 and 5% in 2026. Next year will mark five consecutive years of increases to reach a record high number of bankruptcies, 24% above the pre-pandemic average. Insolvency risks are particularly concentrated in the automotive, construction, retail, and consumer goods sectors.
There has also recently been a notable rise in "mega bankruptcies" in the U.S. – those filed by companies with over US$1bn in reported assets. The first half of 2025 saw 17 such bankruptcies, the highest number since the Covid-19 pandemic, with 32 in the past 12 months, well above the historical average. The current challenging business environment – marked by factors such as tariffs, weak demand, rising costs, technological transformation, growing competition, and regulatory changes – is heightening the risk of bankruptcy and also claims against directors.
Claims activity is increasing in the highly dynamic D&O market
Over the past three years, there has been a continual increase in the frequency of new claims against directors and officers, now approaching or exceeding pre-pandemic rates in most regions of the world. Claims severity continues to be an issue in North America. For D&O insurers, the U.S. especially is a highly complex market due to its high frequency of securities class action claims and surging average settlement costs, which rose by 27% in the first six months of 2025 to US$56mn. Meanwhile, shifting governmental policy in the U.S. and parts of Europe regarding DEI (diversity, equity, inclusion), ESG (environmental, social, governance), and artificial intelligence (AI) have introduced new complexities for boards to navigate.
To read the full Allianz Commercial D&O Insurance Insights report, please visit: Report | Directors and officers (D&O) insurance insights 2026
