Best’s Market Segment Report: U.S. Director & Officers’ Liability Remains Profitable, But Warning Signs Are Evident
Premium generated from U.S. directors and officers’ (D&O) liability coverage declined for a fourth straight year in 2025, reflecting heightened competition in the segment as warning signs loom over commercial line’s underwriting performance, according to a new AM Best report.
The Best’s Market Segment Report, titled “US D&O Liability - Still Profitable But Warning Signs Are Evident,” cites a 2025 direct loss ratio that was five percentage points higher than the prior year. According to the report, this could possibly reflect rising claim costs and associated expenses beginning to outpace premiums on an individual account basis. Another note of caution is the reserve levels for the 2023 and 2024 accident years, which proved to be inadequate in 2025. “This might indicate an underlying deficiency that could lead to a downturn in D&O liability underwriting results over the near term,” said David Blades, associate director, AM Best.
Slower capital markets activity in recent years has limited new business opportunities for D&O insurance companies and created an excess supply of capacity, putting downward pressure on rates. Risk profiles also continue to shift amid geopolitical and economic uncertainties, complex technology and regulatory scrutiny. In addition, favorable underwriting margins may dissipate as claims remain open longer, owing to the negative impact of social inflation.
