D&O claims surging to pre-pandemic levels as political, social, and cyber exposures rise: Allianz

By Erin Ayers, Front Page News

Social, technological, and political shifts have fueled new sources of liability for directors and officers, with shareholders and regulators paying close attention to how organizational leadership navigates emerging risks, according to Allianz Commercial’s latest Directors and Officers (D&O) Insurance Insights report.

“D&O liability continues to develop at a quick pace, with an evolving regulatory and litigation environment, an increasingly complex risk landscape, and an uncertain geopolitical and economic outlook,” said Jarrod Schlesinger, global head of financial lines and cyber for Allianz Commercial, in the report. “Against this backdrop, there has been a continual increase in the frequency of new claims against D&Os, now approaching or exceeding pre-pandemic rates in most regions of the world.”

Directors and officers have increasingly been held accountable for failing to anticipate or adapt to new exposures and experiencing reputational harm, financial loss, or operational disruptions as a result, per the report.

In the United States, securities class action filing has remained steady, likely to just miss last year’s 229 filings. However, at the same time, severity has increased, with the average settlement value rising 27% to $56 million in the first half of 2025.

Cyber risk remains a top exposure, according to the report, with heightened expectations for boards to oversee cybersecurity measures and more litigation against directors and officers. New regulations around the world have ramped up pressure in recent years, and in the U.S., shareholder litigation after ransomware events and data breaches has become commonplace.

“The willingness to seek damages in court is increasing, partly out of fear of recourse claims by shareholders or supervisory authorities. The threshold for asserting internal liability is falling while the number of cyberattacks with a systemic impact has increased,” said Alfred Mora, chief underwriter, financial lines, Germany and Switzerland for Allianz.

Elsewhere in the technological risks realm, AI adoption has already triggered securities class actions and regulatory investigations. Regulators and shareholders have taken boards to task over misleading statements about AI investments and understatement of AI risks.

“Companies are under growing pressure to show they are following the latest trends but if investments fail to perform as expected, or if companies fall behind their peers, shareholders will ask questions to directors,” said Sandy Codding, regional head of portfolio steering, financial lines, North America, for Allianz.

Schlesinger added, “Fast evolving areas like tariffs and AI are difficult areas of risk to navigate, as well as predict and quantify. Robust governance and risk management are critical, but in today’s volatile climate, boards must also seek out the tools and expertise needed to identify, manage and communicate these future risks to stakeholders.”

Directors and officers for privately held companies face different but still significant challenges heading into 2026, Allianz said. Bankruptcy and regulatory enforcement comprise the main sources of private D&O claims, along with allegations of breach of fiduciary duty and trade/tariff-related risks. Insolvencies are still the main driver of private D&O claims and have increased 6% in 2025 and projected to rise another 5% in 2026 to hit a record high number of bankruptcies.

“Managing a multinational corporation has never been more challenging, as leaders find themselves caught between conflicting governmental priorities and policies across the globe, and trade tensions and fiscal challenges weigh on the economy,” said Dan Holloway, Allianz’ head of management liability, commercial and professional indemnity. “It’s important that directors understand their expanded fiduciary duties in the event of an insolvency, seek expert advice, and keep detailed records of all key decisions. Such information will prove critical if D&Os face claims of mismanagement or allegations of conflicts of interest.”

Managing Editor Erin Ayers can be reached at [email protected]