D&O Liability Risks Surge Amid Emerging Threats and Specialized Risk Control Advances

Allianz Commercial's Directors and Officers Insurance Insights 2026 highlights the increasing liability risks faced by corporate boards amid geopolitical uncertainty, cyber incidents, and emerging threats such as artificial intelligence. U.S. securities class action filings remain stable at about 229 cases annually, but the average settlement size has increased 27% to $56 million in the first half of 2025, indicating rising financial exposure for companies. Shareholder derivative litigation has sharply increased, with significant settlements predominantly occurring over the past five years, signaling greater investor litigation activity against directors. Non-accounting and event-driven claims now predominate the D&O claims landscape, including those related to mergers and acquisitions and regulatory enforcement, influenced by shifting political and social climates such as tariffs and DEI regulatory changes in 2025. Business insolvencies, a key driver for D&O claims particularly in private firms, are expected to grow by 6% in 2025 and 5% in 2026, with a notable increase in mega bankruptcies during the first half of 2025. Technological risks, including ransomware and cybersecurity oversight failures, are major factors in D&O claims, now accounting for a significant portion of sizeable cyber insurance losses. The report highlights a growing trend of litigation based on alleged AI-related misrepresentations, with over 50 related securities class actions since 2020, reflecting regulatory scrutiny on corporate disclosures of AI capabilities. Environmental concerns, specifically PFAS liabilities, pose extensive litigation risks linked to alleged failures in disclosure by boards. Geopolitical conflicts and fluctuating tariffs have escalated risks, necessitating enhanced board oversight of global operations and risk management. The U.S. remains the most litigious market, with significant corporate spending on class actions mandating careful risk analysis for companies expanding or reshoring domestic operations. Allianz advocates for a proactive, horizon-scanning approach for directors to identify emerging risks beyond historical trends. Separately, Intact Insurance Specialty Solutions outlines the increasing need for specialized risk control services tailored to sector-specific exposures. Their teams integrate deep industry expertise and consultative risk management across telecommunications, medical technology, IT, and manufacturing sectors. This approach shifts risk control from traditional inspection to strategic partnership, delivering targeted interventions that reduce claims and bolster client operations. Case studies include successfully stabilizing a telecommunications client’s fleet losses through bespoke risk control engagement. Cross-sector collaboration among risk control specialists helps address interconnected risks such as cyber threats, ergonomics, and fire protection with global knowledge sharing. The growing complexity of industry risks drives demand for insurers providing specialized, consultative risk control services that align with evolving operational realities and regional variations. Such services promote improved operational efficiency, lower claim frequency, and stronger long-term insurability, evidencing a strategic evolution in risk control as a business improvement tool.