Stable conditions persist

The public company marketplace for D&O continues to stabilize, with most buyers renewing flat to down slightly. Capacity remains abundant and replacing insurers is achievable up to the top of excess towers, although buyers may need to weigh carrier quality against cost savings.

After several years of significant rate decreases, insurers have begun to push back, attempting to hold rates flat. Carriers are increasingly willing to walk away from accounts if they feel pricing has become too thin, particularly for excess layers.

While capacity remains available, the number of insurers willing to participate at each layer — particularly middle excess layers — continues to decrease up the tower, as pricing at higher layers has become too thin for some carriers. Carrier exits and consolidation, albeit limited, have led to some reductions in capital in the D&O market.

That said, insurers are competing for insureds with stable risk profiles, average program limits, and favorable claims histories. Broad coverage remains readily available to most insureds. Most carriers are now offering entity investigation coverage, and a growing number of companies are opting to include it in their D&O programs. Insurers are also increasingly offering coverage for underwriters in connection with initial public offerings (IPOs), although uptake on this coverage extension has not been significant to date.

AI has become a primary talking point for D&O insurers. As AI adoption fuels data center growth and has become a key focus for technology companies, insurers are increasingly eager to understand how AI investments, priorities, risks, and competitive advantages and disadvantages are communicated to shareholders across nearly all industries, not just the tech-adjacent. Underwriters are also focusing on cyber risk.

Rather than bringing clarity, the recent U.S. Supreme Court decision rejecting President Trump’s tariff regime adds to related uncertainty. Businesses will continue to face many of the same challenges, with uncertain territory along with the specter of tariff-related corporate and securities litigation.

The first year of the second Trump administration has brought significant shifts in regulation. Notably, the government has focused efforts on diversity, equity, and inclusion (DEI). The Securities and Exchange Commission (SEC) also recently altered its stance on mandatory arbitration provisions for companies pursuing IPOs, and the current chair has put forward additional industry-friendly proposals. Enforcement activity from the SEC has sharply decelerated under the new administration. In March, Margaret Ryan resigned as enforcement division director, which could result in activity further slowing.

At the state level, underwriters continue to monitor developments related to the applicability of bump-up exclusions, as recently ruled on by the Delaware Supreme Court. We are also awaiting the U.S. Supreme Court’s ruling in SEC v. Sripetch, which could have D&O coverage implications for amounts considered to be “disgorgement.”

Meanwhile, securities class-action filings in 2025 were down slightly from 2024, according to Cornerstone Research. (See Figure 17.) However, potential severity of those filings was the highest ever on record, with 2025’s disclosure dollar loss — the dollar-value change in defendants’ market capitalization over the class period — increasing to $694 billion, 62% more than 2024’s $429 billion. Insurers continue to stress the profitability impacts of the rising costs to defend and resolve securities litigation.

Capacity in the EPL market is ample, with some insurers continuing to be aggressively opportunistic. Carriers are showing greater interest for EPL buyers when they also write the D&O coverage, especially primary or low excess layers.

Incumbents are tending to push for slight rate increases, but marketing can allow buyers to keep rates flat to slightly down. As is typical, market conditions remain more difficult for employers in the retail, hospitality, healthcare, and professional services industries; those with large employee head counts; and those with heavy concentrations in challenging states, such as California.

For private companies and nonprofit organizations, EPL is an essential component of management liability package policies, which means carriers must tread carefully to stay relevant. Where EPL is blended with other management liability coverages, insurers are seeking more premium for the EPL allocations. However, this can be offset — to some degree, at least — by reductions in premium for other lines.

Insurers are concerned about class-action litigation and rising defense and settlement costs for litigation, particularly for cases involving high-wage earners. Single-plaintiff matters are still an issue for insurers, particularly when claimants are high-wage earners or in plaintiff-friendly jurisdictions. DEI remains a hot topic for companies and insurers.

In February, the Equal Employment Opportunity Commission:

• Opened an investigation into whether Nike’s DEI programs have resulted in “a pattern or practice of disparate treatment against white employees.”
• Filed its first lawsuit based on workplace diversity programs, alleging that a bottler and distributor of Coca-Cola products engaged in sex discrimination by excluding men from an employee networking event.