EXECUTIVE RISK

Market at an inflection point, but strategic options remain

KEY TAKEAWAYS

Executive risk markets remain competitive, but buyers face greater scrutiny of financial, operational, governance, and emerging technology risks.

Capacity remains strong and terms are largely stable, but pricing pressure is building in D&O and EPL.

Buyers that proactively address risk concerns and clearly articulate their risk management strategies are best positioned for favorable renewals.

Expected rate changes next quarter*

Flat to 5% increase

Public directors and officers liability

Flat to 5% increase

Private/nonprofit directors and officers liability

Flat to 10% increase

Employment practices liability

Flat to 5% increase

Fidelity/crime

Flat to 5% increase

Fiduciary liability

Pricing is stabilizing across professional and executive risk coverages, with renewal discussions increasingly centered on optimizing coverage, retentions, and limits and ensuring that underwriters understand how organizations are managing emerging exposures. In the second quarter of 2026, according to Lockton data, median total program rates:

ROSE

05%

for public company D&O.

REMAINED

FLAT

for private company and nonprofit D&O.

ROSE

29%

for employment practices liability (EPL).

REMAINED

FLAT

for fidelity/crime.

REMAINED

FLAT

for fiduciary liability.

PUBLIC COMPANY D&O

D&O remains stable as carriers focus on price sustainability

Public D&O buyers continue to find a stable market, but signs of increasing pricing discipline are emerging. Insurer appetite remains strong, although carriers are emphasizing the need for sustainable pricing, particularly in middle and high excess layers.

Pricing is generally flat to modestly higher. Rate reductions have become less common, and renewal discussions are increasingly focused on terms and conditions. Buyers that experienced elevated pricing following an initial public offering or significant loss event may still find opportunities for modest reductions as those exposures normalize.

Organizations with distressed financials, headline risks, adverse stock performance, or significant claims activity face greater pressure. Even when companies are willing to change carriers, particularly in excess layers, meaningful pricing reductions have become harder to secure. Carriers generally cite profitability concerns, loss cost trends, and heightened scrutiny of financial performance as reasons for this shift.

Capacity remains broadly available despite some market consolidation. Carriers continue to pursue growth and compete for desirable accounts, but they have become more conservative when considering expanded terms or deploying larger limits.

Underwriters are taking a closer look at companies pursuing major transactions or significant changes in business strategy, which can create uncertainty about future performance and increase perceived shareholder risk. Certain retail and software business models are also receiving greater scrutiny as market expectations and operating conditions evolve.

Terms and conditions remain largely stable, with no widespread new exclusions. Although AI continues to attract attention from companies, investors, and regulators, D&O insurers have not generally imposed AI-specific coverage restrictions. Underwriters are instead focusing on how organizations govern and disclose their use of AI.

Insurers and buyers continue to monitor potential changes to public company reporting requirements and any easing of IPO-related regulations. Recent Delaware litigation involving bump-up exclusions has also attracted attention across the D&O market as this important body of case law grows and evolves.

Most buyers should prepare for flat to modestly higher pricing, with greater pressure on larger programs and challenged risks. Starting renewal discussions early and placing value on carriers with proven claims-paying records may help buyers achieve stronger outcomes as underwriting discipline increases.

private & nonprofit D&O

A Jekyll and Hyde market

Private company and nonprofit D&O buyers are navigating a market with two distinct personalities. Conditions remain favorable for organizations with strong risk profiles, supported by abundant capacity, stable terms, and predictable renewals. However, insurers are showing greater caution around financial distress and emerging claims trends, creating pockets of pressure.

For many organizations, pricing remains stable, with renewals near flat. But single-digit increases are becoming more common as carriers seek improved profitability.

The same dynamic is evident in capacity. Excess capacity remains broadly available, and most buyers can secure the limits they need. Larger and more complex risks, however, may find fewer insurers willing to lead primary layers. Some carriers are also reducing deployed limits or otherwise being more conservative. Competition remains strong but increasingly selective.

Underwriters are drawing clearer distinctions between preferred and challenged risks. Organizations with strong financial profiles continue to experience favorable conditions, while companies facing significant debt burdens, liquidity concerns, loan maturities, or financial stress are receiving greater scrutiny. Healthcare organizations with more than $1 billion in revenue and/or meaningful antitrust exposure are drawing closer scrutiny.

Terms and conditions remain largely stable, with few new exclusions appearing at renewal. However, some carriers are showing greater restraint on antitrust, breach of contract, and entity investigation sublimits.

Insurers are also asking more detailed questions about technology and AI-related exposures, including liability, governance, and security. AI-enabled software providers may face heightened scrutiny as carriers assess potential claims arising from the development, deployment, and use of these technologies.

Insurers are monitoring the AI-related litigation boom with concern that organizations' investments in and deployment of AI have become significant sources of exposure. They also continue to monitor developments tied to management liability transactions, including the Serta bankruptcy ruling, in which nonparticipating lenders were awarded roughly $400 million in damages and interest.

Looking ahead, most buyers should continue to experience flat to modestly higher pricing. Organizations facing financial pressures, operating in challenged sectors, or presenting complex risk profiles should expect more difficult underwriting conversations.

Buyers should proactively address issues likely to draw scrutiny. Rather than simply reporting layoffs, covenant violations, or acquisition activity to underwriters, organizations should explain the business rationale, risk management approach, and steps being taken to manage exposures. Buyers that shape the narrative early can often secure more favorable renewal terms.

As underwriting discipline increases, the focus should shift from cost to coverage, limits, and retentions. Accepting a higher retention may provide greater value than sacrificing coverage breadth for marginal pricing improvements.

EPL

Turbulence ahead

EPL insurance buyers face an increasingly disciplined market as carriers respond to deteriorating claims performance. Insurers are focusing more closely on pricing, retentions, and underwriting quality, with many seeking remediation across their EPL portfolios. Competition and capacity remain available for many risks, but buyers should expect more challenging renewal discussions as the market firms.

Pricing is increasing for most buyers, although outcomes vary. Employers with smaller head counts generally experience more modest increases. Larger organizations, including companies with more than $1 billion in revenue, may face greater pressure. Claims activity, head count growth, layoffs, operating jurisdictions, and renewal strategy will influence individual results.

Carriers cite increased claim frequency and severity, higher defense costs, rising single-plaintiff claim costs, and social inflation26 as drivers of larger judgments and settlements. Insurers are also seeing more AI-assisted filings from pro se plaintiffs. At the same time, carriers are becoming less flexible in allowing insureds to use non-panel defense counsel.

Capacity remains stable and generally available, but buyers may need to pay more to access it. No major new entrants are reshaping the market, and certain established carriers are charging more for EPL. Some insurers continue to seek growth but are increasingly managing risk through higher or split retentions, in addition to premium increases. Competition is more limited for challenged classes of business, including retail, healthcare, hospitality, restaurants, and professional services firms.

California remains the most closely watched jurisdiction, while New York, New Jersey, and Washington are also drawing scrutiny. Employers with large head counts, significant claims history, and high-wage earners are in focus, as are healthcare and retail employers.

Although no new widespread exclusions are emerging, terms and conditions are tightening in select areas. Biometric privacy coverage may be harder to secure for Illinois exposures, with many carriers favoring exclusions over sublimited defense expense coverage. Wage and hour coverage is becoming less available, even for defense-only protection, and optional duty-to-defend coverage can be harder to obtain.

Most buyers should expect single-digit rate increases at upcoming renewals, with larger adjustments possible for challenged risks and certain jurisdictions. Buyers should market their programs carefully, emphasize loss-prevention efforts, and demonstrate why they represent preferred risks. Price-sensitive organizations may need to consider higher retentions or lower limits but should evaluate effects on total cost of risk before reducing limits or sacrificing coverage.

FIDELITY/CRIME

Stable conditions persist as fraud schemes evolve

The crime insurance market remains stable, competitive, and profitable. Conditions changed little in the second quarter, although underwriters are paying increasing attention to AI-enabled fraud, social engineering, and digital asset exposures. Competition remains strong, but carriers are becoming more disciplined when evaluating risks with weak controls or meaningful loss activity.

Pricing is generally flat to modestly higher. Organizations with clean loss histories continue to secure favorable pricing at renewal, while accounts with adverse loss experience, significant exposure growth, or requests for expanded coverage can expect modest rate increases.

Capacity remains abundant, supported by favorable underwriting results and competition among incumbent carriers, market specialists, and newer entrants. Additional capacity continues to enter the market as crime insurance remains more profitable for insurers than other financial lines.

Underwriters are paying particularly close attention to social engineering controls, payment authorization procedures, wire transfer verification protocols, AI governance, and digital asset exposures. Insurers are responding to increasingly sophisticated fraud schemes, including deepfake-enabled impersonation attacks and business email compromise incidents.

Social engineering coverage remains one of the most closely negotiated areas of crime programs. Buyers should carefully review applicable limits, sublimits, deductibles, verification requirements, and definitions. Digital asset coverage, where available, remains tailored and dependent on an organization’s controls and operational framework. Many crime policies continue to exclude digital assets unless affirmative coverage is negotiated.

Social engineering fraud27 continues to generate significant claim frequency, while employee theft remains a major driver of loss severity. Check fraud, payment fraud, business email compromise, and other impersonation schemes continue to affect organizations across a broad range of industries. Insurers are also monitoring the evolving regulatory framework surrounding stablecoins and other digital assets as adoption expands.

Financial institutions, digital asset businesses, payment processors, and organizations with significant funds transfer activity generally face greater underwriting scrutiny than the broader market.

Buyers should continue to expect flat renewals to modestly higher pricing. In the current environment, buyers should also review social engineering policy limits, test wire transfer verification procedures, assess vulnerability to AI-enabled fraud, and maintain strong payment controls and segregation of duties.

FIDUCIARY LIABILITY

Market remains stable as ERISA scrutiny broadens

The fiduciary liability insurance market remains stable and competitive. Capacity is abundant, and carriers continue to view the coverage favorably, particularly as they look for growth opportunities outside of D&O and other financial lines with more severe claims activity.

Pricing is generally flat to slightly up. Organizations without material claims or significant exposure changes should expect flat renewal outcomes, while larger plans and those with meaningful participant growth or seeking broader terms may see modest increases.

Competition remains strong as more carriers reengage in the coverage after several years of caution tied to excessive fee litigation. Capacity remains plentiful, although insurers continue to manage limits on larger or more complex risks.

Underwriters continue to apply greater scrutiny to very large plans, plans with large participant counts, and employee stock ownership programs (ESOPs). Conditions for newer or highly leveraged ESOPs and those with limited valuation histories remain more challenging than for traditional 401(k) and other defined contribution plans.

Claim activity increased in 2025, and excessive fee suits continue to be a significant driver of fiduciary claim severity. Smaller companies increasingly face these types of suits, broadening the universe of policyholders that may be exposed.

In May, in Matula v. Wells Fargo & Co., the 8th U.S. Circuit Court of Appeals upheld a lower court ruling that a former employee lacked standing to file a suit over a 401(k) plan’s use of forfeitures, which the plaintiff argued violated the Employee Retirement Income Security Act (ERISA). Insurers are monitoring additional litigation related to plan forfeitures, along with litigation related to health and welfare plans, tobacco user surcharges, private investment options, and emerging AI-related risks tied to plan administration, account management, and investment decisions.

Plan sponsors and insurers are watching how the Supreme Court rules in Anderson v. Intel, which centers on investment underperformance. The court will hear oral arguments regarding the case on Oct. 6. Pleading standards related to ERISA-prohibited transactions also remain top of mind since the Supreme Court’s 2025 ruling in Cunningham v. Cornell University.

Most buyers should continue to expect flat renewals or modest rate increases, absent material claims or exposure changes. Buyers that have not recently marketed their primary layer may want to test the market, while organizations with growing plans should reassess limits. ESOPs should start the renewal process early and be prepared to address valuation history, leverage, transaction structure, and plan governance.

*Note: Rate ranges presented here reflect expected renewal outcomes — as of the Lockton Market Update publication date — over the next quarter for most insurance buyers. These should not be taken as a guarantee of any specific results during renewal negotiations. Depending on risk profiles, loss histories, account specifics, and other factors, individual buyers may renew their programs outside these ranges.

26Social inflation: The increase in insurance claim costs beyond general economic inflation, driven by changes in societal attitudes, legal environments, and litigation behavior. Contributing factors include expanded theories of liability, higher jury awards, broader interpretations of coverage, and increased plaintiff attorney activity. Social inflation is most prominent in U.S. casualty lines, including auto liability and general liability, and some management liability coverages. (See glossary.)

27Social engineering fraud (SEF): When cybercriminals exploit human vulnerabilities, like trust and familiarity with routine activities, to trick employees into transferring funds, surrendering credentials, or disclosing sensitive information. SEF is a significant vector in cybersecurity incidents and related losses. (See glossary.)