The Directors and Officers (D&O) insurance market has entered a new phase. After several years of volatility, claim activity, and shifting underwriting standards, 2025 and 2026 are bringing new challenges and opportunities for executives and their companies.
Whether your organization is a growing private firm, a nonprofit, or a publicly traded company, D&O coverage remains essential for protecting leadership from claims tied to management decisions. Here are the key issues shaping the D&O landscape today.
- The Evolving Regulatory Environment
Regulators are becoming more active and coordinated across multiple jurisdictions. The Securities and Exchange Commission, state attorneys general, and global watchdogs are increasing their scrutiny of corporate disclosures, governance practices, and ESG reporting.
For company leaders, this means more potential exposure to enforcement actions and shareholder suits. Compliance and transparency are not optional they are central to D&O risk management.
What to do: Ensure your company has clear documentation of board decisions, strong disclosure controls, and a review process that involves both legal counsel and your insurance advisor.
- The ESG Factor
Environmental, Social, and Governance (ESG) issues continue to dominate boardroom discussions. Shareholders, regulators, and investors are demanding greater accountability in climate reporting, diversity metrics, and sustainability commitments.
D&O insurers are watching closely. Misstatements or failures to follow through on ESG goals can trigger claims of misrepresentation or breach of fiduciary duty.
What to do: Be consistent in your company’s ESG communications and actions. If you make public commitments, ensure those goals are realistic, documented, and aligned with your corporate strategy.
- Cybersecurity Oversight and Board Responsibility
As cyberattacks grow in both frequency and impact, boards are being held more accountable for oversight of cybersecurity and data protection. Recent lawsuits have targeted directors for failing to ensure proper cyber risk management.
What to do: D&O and cyber insurance should work together. Make sure your board receives regular cybersecurity briefings and that your D&O policy does not exclude claims related to cyber incidents.
- Mergers, Acquisitions, and Investment Risk
Deal-making is on the rise again, and with it comes increased litigation risk. Claims often arise from disputes over valuation, disclosure, and fiduciary duty in both successful and failed transactions.
Private equity firms and startups are particularly exposed as investors demand accountability when deals do not perform as expected.
What to do: Before entering a merger or acquisition, review your D&O coverage and tail provisions. Make sure policies cover pre-closing acts and that limits are sufficient to address potential post-transaction claims.
- Rising Shareholder Activism
Economic uncertainty, performance pressure, and governance concerns have fueled an increase in shareholder activism. Activist investors are using litigation and proxy battles to influence board decisions, executive compensation, and corporate strategy.
What to do: Communicate openly with investors, maintain transparent financial reporting, and prepare your leadership team for potential activist engagement. D&O coverage should include defense for regulatory investigations and derivative suits.
- Litigation Funding and Increased Claim Severity
The growth of third-party litigation funding has made it easier for plaintiffs to pursue complex and costly lawsuits against corporate leaders. As a result, settlement values and defense costs have climbed.
What to do: Review policy limits and consider higher excess coverage. Evaluate carriers that specialize in complex litigation management and global defense coordination.
- The Shift Toward Private Company Claims
D&O risk is no longer confined to large public companies. Private and family-owned businesses are increasingly facing claims related to employment practices, shareholder disputes, and financial mismanagement.
What to do: If your company has outside investors, a board, or complex ownership structures, D&O coverage is critical. Private company policies are affordable and customizable to your risk profile.
- Underwriting Discipline and Market Stability
After several years of premium increases and tightened underwriting, the D&O market is showing signs of stabilization. More insurers are reentering the space, bringing competitive pricing for well-managed companies. However, carriers are maintaining a strong focus on governance, transparency, and financial performance.
What to do: Maintain open communication with your agent and underwriters. A clean governance record, strong financials, and documented compliance practices can help secure favorable terms and pricing.
The D&O insurance environment in 2025 and 2026 is complex but manageable for companies that stay informed and proactive. Strong governance, transparent reporting, and integrated risk management are now the foundation of adequate D&O protection.
Our agency specializes in helping businesses navigate these evolving risks and secure tailored D&O coverage that protects executives, board members, and corporate assets.