Geopolitical tensions, cyberattacks and risks related to artificial intelligence are emerging as new sources of liability claims against directors and officers, according to a report released Wednesday by Allianz Commercial.
However, the U.S. financial lines market is generally beginning to show signs of stabilization, the insurer said.
Based on first-half activity, financial lines insurers expect a slight decline in U.S. securities class-action lawsuits, to 216 in 2025 from 229 last year, according to National Economic Research Associates data cited in the report.
However, claims severity and settlement costs are increasing. The average settlement value jumped 27% to $56 million in the first half of 2025. That compares with an inflation-adjusted $44 million in 2024 and the $38 million average over the previous nine years.
Global business insolvencies, a key driver for D&O liability, especially for private companies, are set to rise by 6% in 2025 and 5% next year after a sharp increase last year, the report said.
Megabankruptcies in the U.S. — those filed by companies with over $1 billion in reported assets — surged to 17 in the first half of the year, the highest number since the COVID-19 pandemic, according to the report.
Cyber incidents, such as ransomware attacks and outages, are major drivers of D&O claims frequency. AI-related lawsuits also are rising sharply, with more than 50 filed in the past five years.
“D&Os are coming under increasing scrutiny from shareholders and regulators in what is a challenging geopolitical and economic environment. Fast-evolving areas like tariffs and AI are difficult areas of risk to navigate, as well as predict and quantify,” Jarrod Schlesinger, global head of financial lines and cyber for Allianz Commercial, said in the report.
Despite the trends the report notes, segments of the U.S. financial lines market, such as private D&O, remain more competitive.
“Broadly, we have seen little change in insurance buying behavior, although some insureds have been in a better position to purchase additional limits in the current market,” the report said.