This quarterly update reflects and is based on data and insights available as of October 1, 2025. In this issue we examine key trends in pricing, capacity, claims, and sector dynamics. Drawing from recent industry reports, we highlight the persistent softness while underscoring signs of stabilization that could foreshadow a more disciplined market in 2026.
Introduction
As we close out the third quarter of 2025, the Directors and Officers (D&O) insurance market continues to navigate a landscape of softening conditions. What began as a robust buyer's market in the post-pandemic recovery has evolved into a more nuanced environment, where premium reductions persist, but at a decelerating pace. Underwriters are increasingly vocal about unsustainable pricing amid rising litigation risks, geopolitical uncertainties, and technological disruptions.
For public companies, the median premium decline has slowed to around 5% year-over-year, a marked shift from the double-digit drops of 2023 and 2024. Private entities face similar tailwinds, but grapple with amplified economic pressures, including surges in bankruptcy and employment-related claims. Financial institutions, a bellwether sector, should benefit from enhanced coverage options but must contend with regulatory scrutiny in areas like AI disclosures and ESG compliance. In general, the market's dynamic nature may reward initiative-taking buyers but requires careful attention to potential risks that may diminish any gains.
Summary of Broker Projections
Woodruff Sawyer's "D&O Looking Ahead Guide 2026," released on September 23, 2025, provides a comprehensive snapshot of the market as of mid-year, emphasizing a soft, yet stabilizing environment for public D&O renewals. The report, based in part on the firm's D&O Databox™ Mid-Year Report and Underwriters Weigh In™ survey, underscores that while 70% of clients experienced premium decreases through mid-2025, the rate of decline has slowed significantly. For mature public companies, the median reduction stood at 5% in 2025, down from high single-digit cuts in 2024 and 14%-22% in 2023, a convergence that has largely erased the pricing premium once paid by newly public issuers.
Capacity is still ample, particularly in primary and lower excess layers, where established insurers compete aggressively to keep business. However, new entrants face hurdles in penetrating higher excess towers, leading to selective underwriting and a cautious defense of market share by incumbents. Litigation trends offer a mixed picture: Securities class action filings dipped slightly in the first half of 2025 compared to 2024, with dismissals on the rise, yet settlements averaged large sums, signaling sustained payout pressures. Underwriters, per the 2025 survey, prioritize shareholder litigation over government enforcement as the top concern with 83% noting an increasingly complex risk landscape driven by global volatility.
Emerging risks dominate the guide's forward-looking analysis. AI-related exposures, including "AI washing" in disclosures and misinformation from generative tools loom large, alongside trade policy disruptions from tariffs and supply chain shifts. The report also flags incorporation trends away from Delaware, toward Nevada or Texas, as a potential mitigator of fiduciary duty suits, reducing demand for Side A coverage.
Marsh Global Insurance Market Insights.
Marsh's Q3 2025 U.S. Insurance Rates update reports D&O liability rates declining 4%, a moderation from 5% in prior quarters, within a broader 3.8% commercial lines softening. Their analysis of 2024 claims data reveal a 6% uptick in management liability notifications, dominated by D&O at 79% in the U.S. and Canada. For 2025, Marsh expects continued favorability for UK and U.S. insureds, with restructuring trends amplifying exposures in distressed sectors.
Price Forbes' October 2025 Q4 Update reaffirms a buyer-friendly D&O market, particularly for financial institutions, with premium reductions averaging 5.2% year-on-year and enhanced entity coverage options. Capacity growth in Australia drove 15-40% drops, but emerging risks like cyber and insolvencies prompt tighter underwriting globally. The report projects flat-to-modest declines through year-end, with stabilization in 2026 as carriers defend shares amid rising settlement severities.
Other Notable Findings and Projections
Pricing in the D&O market entered Q3 2025 with momentum from earlier declines, but the pace has undeniably slowed. According to Price Forbes' Q4 2025 Update, the average cost for $1 million in coverage fell 5.2% year-on-year, with nearly 70% of primary policies securing reductions—echoing Woodruff Sawyer's client data. Excess layers, especially for large programs, saw the steepest drops, fueled by insurer appetite for financial institutions. Yet, this softening is not uniform: Underwriting discipline is resurging for complex risks, such as those involving crypto or high-litigation sectors, where carriers demand granular loss runs and governance details.
Capacity dynamics reinforce this buyer-friendly tilt. Ample supply persists, enabling broader terms like entity investigation coverage and Side A difference-in-conditions enhancements. Long-term agreements (LTAs) have gained traction, allowing firms to lock in rates amid uncertainty, particularly for financial/technology companies and asset managers facing volatile exposures. However, signs of caution abound: Insurers are more selective at lower attachment points, and new capacity is waning.
For private D&O, Munich Re's August 2025 Analysis highlights a parallel but riskier trajectory. Premiums for privately held firms, which make up 99% of U.S. businesses, remain competitive, but economic volatility—manifest in 694 bankruptcy filings under the U.S. Code in 2024, the highest since 2010—has spurred claims alleging mismanagement or self-dealing. Capacity here is robust for top-tier risks, yet plaintiffs' aggressive tactics, including third-party financing, inflate settlements, prompting carriers to tighten entity coverage limits.
Renewal timelines reflect this equilibrium: Q3 saw 85% of placements concluded within 60 days, but early engagement is key to capturing concessions.
Litigation and Claims Environment
Q3 2025 litigation data paints a picture of moderation amid increasing claims. Securities class actions, while down slightly in H1, continue to drive severity, with average settlements exceeding $20 million. This average is up 15% from pre-2024 settlements results. While dismissal rates improved to 25%, buoyed by stronger judicial scrutiny, derivative suits tied to executive compensation and M&A disputes proliferated, particularly in tech and healthcare.
Claims frequency stays above historical averages, worsened by economic headwinds. Private entities saw a spike in employment practices liability (EPL) claims, with the EEOC filing 142 suits in fiscal 2024, often cascading into D&O exposures via indemnification demands. Fraud and dishonesty allegations, per the Association of Certified Fraud Examiners, surged during recessions, hitting private firms hardest as financial pressures mount.
Underwriters' wariness is clear: TransRe's mid-2025 Commentary, though sparse on specifics, advocates for "immediate and significant price rises" to address pricing adequacy gaps. They cite new capacity as a false comfort against loss trends. In response, carriers are embedding such things as cyber carve-backs and prior acts exclusions more routinely, while favoring programs with robust Side A DIC for non-indemnifiable risks.
Emerging Risks
Q3 2025 amplified several areas of concern. These include AI risks, from disclosure failures and algorithmic bias, ESG litigation targeting "greenwashing" in banks, and cyber breaches triggering shareholder suits.
Geopolitical tensions, including U.S. tariffs, disrupt earnings guidance, potentially sparking breach-of-duty claims. DEI backlash and FCPA enforcement add layers of concern, as does the growing shift away from Delaware incorporation.
Conclusion
The D&O market as of October 1, 2025, is one of cautious optimism as a soft cycle winds down amid increasing risks. With litigation simmering and innovations like AI reshaping potential liabilities, boards must prioritize insurance as a strategic asset. As 2025 ends, the focus for insureds should shift to resilience, ensuring D&O programs evolve with new emerging risks. For Q4 the soft market lingers, with up to 60-70% of renewals resulting in flat-to-down pricing. Stabilization will accelerate in 2026, as underwriters expect an uptick in the volatility of claims. Private markets may harden first, driven by bankruptcy trends, while public capacity holds but with stricter terms. As usual we will keep you informed of changes.