D&O insurance rates continue to fall in 2025. After significant price hikes in recent years, increased capacity has helped bring costs back down. However, recent D&O market forecasts warn that the period of falling rates could end soon. Catch up on what carriers are doing now, what could be ahead, and what it means for your coverage.
D&O Premiums Fell Again in Q1
The Council of Insurance Agents & Brokers (CIAB) says that D&O insurance rates fell again in the first quarter of 2025. Although commercial property and casualty insurance rates increased overall, D&O, cyber, employment practices, terrorism and workers’ compensation lines all saw price decreases.
This is a stark difference compared to the D&O market condition seen just a few years ago. In 2020 and 2021, D&O rates underwent double-digit price hikes. Then in 2022, price hikes showed significant moderation, and by 2024, rates were actually falling.
CIAB says the recent price decreases appear to be the result of increased competition. As new carriers enter the market, there’s increased pressure to take on good risks, and underwriting may be more flexible as a result.
The Changing D&O Risk Landscape
Carrier capacity is only part of the equation impacting rates. Litigation trends and claims losses also play a pivotal role in underwriting.
Some risks have abated. For example, Cornerstone Research shows that there were 11 SPAC-related securities class action filings in 2024. While this may seem like a large number, it’s a major decrease compared to recent years. In 2021, there were 33 SPAC-related filings. In 2022 and 2023, there were 28 and 27, respectively. According to Insurance Journal, AM Best says that renewal premium for D&O was down for companies involved in IPOs, SPACs, and de-SPACs.
At the same time, other risks are heating up. AI-related risks, in particular, are an increasingly important factor as companies across industries adopt new AI technologies. Companies that overstate their use of AI can be accused of “AI-washing” and may face litigation as a result. Cornerstone Research says there were 15 AI-related securities class action filings in 2024, up from seven in 2023.
The political landscape of 2025 could also lead to new claims trends. With the new administration, there has been a major shift in policy. New tariffs and the pushback against DEI initiatives are just a couple of the changes that could lead to losses and D&O claims for companies.
What’s Next for the D&O Market?
AM Best says that premium volume has declined, but the direct loss ratio monoline D&O liability has improved. Although there is some concern that recent pricing reductions are not sustainable and that new AI risks will challenge underwriting, insurers are still benefiting from the rate hikes that occurred in 2020 and 2021.
It’s a complex situation, but according to Property Casualty 360, analysis from AM Best points to potential trouble for the D&O market, and D&O renewal price decreases will likely start to moderate soon.
What Does the D&O Market Mean for Your Coverage?
D&O prices can’t fall forever, but they are falling right now. Organizations can take advantage of the soft D&O market to secure robust coverage with favorable terms.
· Assess your coverage amounts. If you had to accept lower limits and higher retentions during the hard D&O market of 2020 and 2021, you may be interested is securing higher limits and lower retentions now. Also consider whether you need higher limits in light of changing coverage needs, including growth in your own company and rising litigation costs in general.
· Check your coverage terms. More flexible D&O underwriting puts you at an advantage. This is a good time to look at your coverage and determine whether there are terms you want to negotiate.
· Review your risk management strategies. Although rates are still falling in general, poor risk management can still affect your underwriting and leave you exposed to claims. With the rise of AI-related claims, this is an area that deserves particular attention, and D&O underwriters may be looking at these issues closely. Also consider how risks related to cybersecurity, DEI and tariffs could affect your organization.
Do you have the best D&O coverage available now? NSI Insurance Group can help you secure robust protection for your organization and executives. Request a complimentary D&O analysis and quote >
