Allianz Commercial: Geopolitics and cyber drive risk exposures for directors and officers in 2026
- Written by Media Outreach
- Geopolitical and macroeconomic uncertainty, tariffs, and cyber risks pose liability challenges for the boards of corporations of all sizes.
- The increasing number of insolvencies around the globe is becoming a major issue for executives.
- Claims severity and settlement costs are increasing, especially in the US, while the commercial financial lines insurance market remains highly dynamic.
According to Allianz Commercial's latest Directors and officers (D&O) insurance insightsreport,D&Os can be held accountable for misjudging the impact of geopolitical developments on their company's operations or for failing to adequately adapt to the legal or regulatory requirements in different countries. Liability for D&Os may arise from shareholder lawsuits or regulatory penalties directed both against the entity and individual decision-makers.
At the same time, cyber liability risks for directors and officers have risen sharply in recent years with higher expectations for board level oversight of cyber security and a trend towards more litigation and regulatory actions. Exposures for D&Os typically arise from their duty to oversee the organization's cyber security posture. Claims against directors have been triggered by a wide range of events, including data breaches, ransomware attacks, and even technical glitches. Ransomware accounted for around 60% of the value of large cyber insurance claims (>€1mn) seen by Allianz Commercial during the first six months of 2025, according to its annual Cyber security resilience outlook. Should a cyber incident result in financial loss, directors could face legal claims from shareholders, customers or suppliers if the board is seen to have failed to implement adequate risk controls or business continuity planning.
"Directors and officers (D&O) liability continues to develop at pace, with an evolving regulatory and litigation environment, an increasingly complex risk landscape, and an uncertain geopolitical and economic outlook," explains Jarrod Schlesinger, Global Head of Financial Lines and Cyber at Allianz Commercial. "Against this backdrop, there has been a continual increase in the frequency of new claims against directors, now approaching or exceeding pre-pandemic levels in most regions around the world. Meanwhile, claims severity continues to be an issue in North America in particular."
Insolvencies drive D&O claims globally
Bankruptcy and regulatory enforcement actions are among the top sources of private D&O claims, although claims can also arise from allegations for breach of fiduciary duty, such as misleading or inadequate disclosure, or negligence. According to Allianz Trade, global business insolvencies are expected to rise by +6% in 2025 and +5% in 2026. Next year will mark five consecutive years of increases to reach a record high number of bankruptcies, +24% above the pre-pandemic average. Insolvency risks are particularly concentrated in the automotive, construction, retail, and consumer goods sectors.
The current challenging business environment – marked by factors such as tariffs, weak demand, rising costs, technological transformation, growing competition, and regulatory changes – is heightening the risks of claims against directors. There has also recently been a notable rise in "mega bankruptcies" in the US – those filed by companies with over US$1bn in reported assets. The first half of 2025 saw 17 such bankruptcies, the highest number since the Covid-19 pandemic, with 32 in the past 12 months, well above the historical average.
"Managing a multinational corporation has never been more challenging, as leaders find themselves caught between conflicting governmental priorities and policies across the globe, and trade tensions and fiscal challenges weigh on the economy. It's important that directors understand their expanded fiduciary duties in the event of an insolvency, seek expert advice, and keep detailed records of all key decisions. Such information will prove critical if D&Os face claims of mismanagement or allegations of conflicts of interest," says Dan Holloway, Head of Management Liability Commercial and Professional Indemnity at Allianz Commercial.
Claims activity is increasing in the highly dynamic D&O market
Over the past three years, there has been a continual increase in the frequency of new claims against directors and officers, now approaching or exceeding pre-pandemic rates in most regions of the world. Claims severity continues to be an issue in North America. For D&O insurers, the US especially is a highly complex market due to its high frequency of securities class action claims and surging average settlement costs, which rose by 27% in the first six months of 2025 to US$56mn. Meanwhile, shifting governmental policy in the US and parts of Europe regarding DEI (diversity, equity, inclusion), ESG (environmental, social, governance), and artificial intelligence (AI) have introduced new complexities for boards to navigate.
Challenging Asia D&O market amidst abundance of capacity
Asia-domiciled risks are seeing heightened competition from an abundance of capacity globally, resulting in the overall commercial D&O market size in Asia shrinking due to rate erosion and limited new business.
"We are seeing more clients cutting insurance spending and being more cautious about costs. This is driving a lot of tenders and remarketing by clients seeking more economical solutions, which in turn is driving more intense broker competition and rate pressure. Terms and conditions are also starting to move with trends of lower deductibles and wider coverages provided by the market.It is a good time for new potential buyers to consider purchasing D&O insurance because of the solutions and choices they can obtain in this market," says Josephine Tam, Regional Head of Financial Lines and Cyber at Allianz Commercial Asia.
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