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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Best’s Market Segment Report: Changing Environment Brings New Risks to D&O Insurers

Despite declining premium volume and challenging underwriting conditions, insurers providing U.S. directors and officers (D&O) liability coverage had their most favorable loss experience in more than a decade in 2024, according to a new AM Best report.

Significant reserve takedowns from prior accident years during the hard market’s peak also led to the best quarterly results in the past seven years and bolstered year-end 2024 results. However, according to the Best’s Market Segment Report, “Changing Environment Brings New Risks to D&O Insurers,” challenges remain from open claims dating to the soft-market years of 2016-2019, which developed adversely in 2024 and could persist. The report also notes that D&O liability underwriters will be challenged by a wide array of risk associated with artificial intelligence.

“Market uncertainty, evolving technology, corporate disclosure related issues, and potential macroeconomic strife stemming from new tariffs are among the factors affecting D&O segment,” said David Blades, associate director, Industry Research and Analytics, AM Best. “Corporate executives continue to face a variety of challenges in managing complex risks amid rising uncertainty.”

The report includes an analysis of data available from the monoline D&O liability supplement in the annual statement filings of U.S. companies. Based on that review, the direct loss ratio monoline D&O liability has improved by more than 10 percentage points from the high over the last 11 years (2014-2024) of 62.4 in 2017 and 2018. D&O underwriters are still benefiting from the significant rate and price increases and the more conservative underwriting and policy terms and conditions that drove a dramatic shift in the market’s dynamics in 2020 and 2021.

As 2025 approaches the halfway point, many market participants have expressed concern that recent pricing reductions that led to D&O liability direct premiums written (DPW) declining in each of the past three calendar years will not be sustainable. According to the report, the primary reason is the multitude of complex risks corporate executives are currently managing, which also include macroeconomic uncertainty; the evolving legal landscape; and the changing nature of cyber risks, in addition to others.

While D&O liability premium for the entire industry was down by 6.0% year over year in 2024, much of that was from the first quarter. Total D&O premium for first-quarter 2024 of $2.2 billion was the lowest quarterly total in four years, with DPW increasing in each following quarter during the year. The increased premiums in the fourth quarter, coupled with significant reserve takedowns, led to a significant drop in the loss ratio.

“The loss ratio for the fourth quarter of 2024 was the lowest quarterly loss ratio of the past seven years by a wide margin, seven points better than for any other quarter,” said Christopher Graham, senior industry research analyst, AM Best. “At the same time, continued profitable results could lead to sustained pressure on pricing if insurers have little reason to raise rates and risk losing profitable business.”

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=353972.

A video discussion about this report with Graham is available at http://www.ambest.com/v.asp?v=ambdando525

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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