Directors and officers across the globe face an increasingly dynamic risk environment as they navigate rising insolvencies, geopolitical uncertainties, and growing legal exposures linked to artificial intelligence (AI) disclosures.
These challenges, highlighted in Allianz Commercial’s “Directors and Officers Insurance Insights” report for 2025, underscore the evolving landscape of D&O liabilities.
Business insolvencies are expected to rise by 11% globally in 2024, with Asia Pacific accounting for a significant number of major cases.
According to Allianz Trade, Asia Pacific recorded 67 large insolvencies during the first three quarters of the year, as firms struggled with higher borrowing costs and inflationary pressures.
Dan Holloway, head of global management liability at Allianz Commercial, said increased bankruptcies often lead to D&O claims, as stakeholders seek accountability for financial mismanagement or breaches of fiduciary duty.
“Many companies have faced higher interest expenses, inflationary pressures, and macro- and microeconomic headwinds that have impacted their business and resulted in a struggle to service their debt load,” he said.
Key sectors such as real estate, construction, and consumer-facing industries are at heightened risk due to their exposure to debt and fluctuating demand.
Ongoing geopolitical crises, including conflicts in Ukraine and the Middle East, are amplifying operational risks for businesses.
Organisations exposed to politically unstable regions may face supply chain disruptions, compliance challenges related to sanctions, and shareholder litigation tied to perceived mismanagement of these risks.
Jarrod Schlesinger, global head of financial lines and cyber at Allianz Commercial, said D&O policies must now account for multi-jurisdictional exposures, as liability risks increasingly transcend borders.
He emphasised the need for companies to reassess their risk frameworks more frequently in response to rapid geopolitical shifts.
AI technology continues to transform industries, but its use also brings heightened scrutiny.
“AI washing,” or overstating AI capabilities, has emerged as a key liability risk, with securities class action lawsuits already filed in the US. Asia-based companies listed on US exchanges may face similar exposure under US securities laws.
The growing availability of third-party litigation funding is reshaping the legal landscape, enabling more class actions and potentially increasing settlement costs.
Allianz Commercial forecasts nearly 10% annual growth in the litigation funding sector through 2028.
“D&Os will face increasing scrutiny from third parties ready to jump on cases and fund them. Claims are likely to become more complex because of funders’ aggressive litigation strategies and the experts they can afford to hire,” Schlesinger said.
Asia’s D&O insurance market has seen falling premium rates as businesses reduce policy limits to cut costs, according to Allianz Commercial.
The drop reflects market competition and economic pressures, but D&O coverage remains essential for protecting executives against evolving risks.
“Despite this, D&O insurance remains crucial for companies due to the multiple exposures executives face, and as loss potential increases with higher severity for claims being resolved,” said Danielle An, regional practice leader for management liability at Allianz Commercial.
A recent “Emerging and Interconnected Risks Survey” by WTW highlighted broader concerns about risk preparedness in the Asia-Pacific region.
Only 29% of surveyed leaders expressed confidence in their ability to manage emerging risks over the next decade.
Technological advancements and cyber threats topped the list of concerns, followed by geopolitical instability and climate-related challenges. Many organisations struggle with fragmented approaches to risk management, the survey revealed.
