Global Directors’ and Officers’ Survey Report 2024/2025 – Latin America

Latin America in the Global Context: Risks and Coverage in a World of Uncertainty

The D&O insurance market in Latin America continues to show key differences compared to global trends, according to WTW's study. While in more developed markets regulatory risks and litigations are the main concerns for executives, in LATAM financial and economic risks continue to dominate the agenda. This is due to macroeconomic volatility, changes in government policies and the instability of some economies in the region.

A key finding is the lower penetration of D&O insurance in the region compared to North America and Europe. This translates into higher levels of exposure for directors and corporate officers, who in many cases must assume greater risks without adequate protection. In addition, the compensation capacity of companies in LATAM is more limited than in mature markets, making the purchase of insurance an even more strategic decision.

In terms of coverage, policies in LATAM tend to offer lower limits and higher sub-limits, indicating that companies choose to reduce costs by sacrificing coverage. This point is critical in sectors with a high level of regulation or a history of increasing litigation, such as finance and energy.

LATAM Evolution from 2024 to 2025: What has changed?

The analysis of LATAM's evolution in the last year reveals three major trends:

1. Increased sensitivity to insurance cost: With economic pressure and rising interest rates, many companies have sought to optimize their insurance expenses, leading to a restructuring in coverage levels and limits purchased.
2. Change in risk perception: While economic risk remains the main one, there has been an increase in concern about risks related to cybersecurity and regulatory compliance. This change reflects the increasing digitalization of companies and clear regulatory advances in terms of data protection and corporate governance.
3. Greater sophistication in policy negotiation: Latin American companies are adopting more mature strategies for contracting D&O insurance, evaluating more options, reviewing terms and conditions in greater detail and seeking synergies with other insurance products.

One of the most relevant points is the increase in claims in certain key markets such as Brazil, Mexico and Chile, which has led to an adjustment in the prices and conditions of the policies. In particular, Side A coverage (personal protection for directors in the event that the company cannot indemnify them) has become more relevant in this context.

Key Findings on Risks and Costs in the Acquisition of D&O Policies

• Differences in the materiality of insurance: While in developed markets D&O insurance is a strategic necessity, in LATAM there is still a perception that it is an "additional expense" and not a risk mitigation tool. However, the growth in litigation and sanctions in the region is changing this view.
• Diversification in coverage limits: Unlike previous years, there is greater variety in the levels of coverage contracted, suggesting that companies are customizing their policies more according to their specific needs.
• More time dedicated to risk management: Compared to 2024, business leaders in LATAM are investing more time in discussing and evaluating risks on their boards, suggesting a maturation in D&O insurance management.

Strategic Recommendations for 2025

Based on these findings, executives in Latin America should consider the following key points for the transfer of directors' and officers' risks through D&O policies in 2025:

1. Reassess coverage levels: It is not enough to purchase D&O insurance, it is necessary to analyze whether the limits and terms really cover the current risks of the company and its industry.
2. Strengthen risk mitigation strategies: A good compliance and governance program can reduce the perception of risk by insurers, improving policy conditions and costs.
3. Explore Side A and Side B options: Personal protection for directors is increasingly relevant. Companies should assess whether their policies adequately cover these scenarios.
4. Analyze trends in claims: With an increase in claims in some markets, it is key to understand how these changes may affect the availability and pricing of D&O insurance.
5. Proactively negotiate with insurers: In a changing environment, companies should seek specialized advice to negotiate better terms and conditions, taking advantage of tools such as benchmarking and market trend analysis.

In conclusion, the D&O insurance market in Latin America continues to evolve, with challenges and opportunities that require a strategic approach by executives and according to their own responsibilities. With a better understanding of the risks and options available, companies can optimize their protection and make more informed decisions for 2025.