Skip to main content
main content, press tab to continue
Survey Report

Insurance Marketplace Realities 2024 Spring Update – Directors and officers liability

May 8, 2024

Availability of abundant capacity continues to drive competitive market dynamics, but where insureds had experienced material premium relief in previous renewal cycles, the extent of decreases may begin to taper off.
Financial, Executive and Professional Risks (FINEX)
Rate predictions: Directors & officers liability
  Trend Range
Stable risk profiles
Primary (public /private company) -10% to flat
Excess/Side A DIC (public company) -10% to flat
Excess/Side A DIC (private company) -10% to flat
Challenged risk profiles
Non-U.S. parent, U.S. exposures Case-by-case basis; potential increases; nevertheless, capacity remains available
Liquidity challenged Case-by-case basis; potential increases; nevertheless, capacity remains available
IPOs and SPACs Case-by-case basis; potential increases; nevertheless, capacity remains available
Challenged industries Case-by-case basis; potential increases; nevertheless, capacity remains available


  • Capacity: The influx of capacity into the market since late 2020 created competition and yielded rate deceleration throughout 2021 and 2022. In 2023, we experienced flattened-to-reduced D&O premium outcomes, which we expect to continue through the remainder of 2024.
  • Rate environment: We expect modest rate decreases to continue in the first half of 2024; however, we foresee challenges obtaining decreases with incumbents, particularly on excess, where incumbents are likely to hold the line on continued rate deterioration.
  • Focus on coverage: In a softer rate environment, insurers may be willing to expand coverage rather than give back premium. We recommend our clients explore the potential broader coverage during their 2024 renewal cycles.
  • Private and non-profit companies
    • Primary: Insureds with low and/or stable risk profiles are seeing enhanced competition, with a minimum of flat renewals and decreases when marketed. While decreases may still be available, we don’t anticipate some of the more drastic rate decreases we saw in 2023. Carriers are now starting to offer guaranteed renewals as well as multiyear policy terms, with a refreshed annual aggregate. The market for high and/or distressed risk profiles is improving but can still be challenging.
    • Excess: For larger risks, excess markets have lowered their increased limits factors (ILFs).
    • Retentions: For challenged risks and those with large exposure increases, carriers continue to press for higher retentions. Minimum retentions continue to be scrutinized but have moderated over the past six months. Severity of increases most often depends on prior renewal increases and the need, if any, for continued correction.
    • Increased deployment: Carriers are willing to regularly deploy capacity for preferred risks. Additional capacity can be found for more risks. This is having an impact on market conditions more broadly, especially for more desirable risks.

Industry-specific D&O rate predictions and notes

Industry-specific D&O rate predictions
Industry Primary (Public) Excess/Side A (Public) Primary (Private, NFP) Excess (Private, NFP)
Aerospace -10% to flat -10% to flat -10% to flat -10% to flat
Construction -10% to flat -10% to flat -10% to flat -10% to flat
Healthcare -10% to flat -10% to flat -10% to flat -10% to flat
Higher education Flat to +10% -10% to flat +10% to +15% Flat to +10%
Life sciences -10% to flat -10% to flat -10% to flat -10% to flat
Marine -10% to flat -10% to flat -10% to flat -10% to flat
Natural resources -10% to flat -10% to flat -10% to flat -10% to flat
Public entities Flat to +5% -10% to flat Flat to +5% Flat to +5%
Real estate, hospitality, leisure -10% to flat -10% to flat -10% to flat -10% to flat
Retail & distribution -10% to flat -10% to flat -10% to flat -10% to flat
Technology, media, telecommunications -10% to flat -10% to flat -10% to flat -10% to flat
Transportation -10% to flat -10% to flat -10% to flat -10% to flat
  • Aerospace: With recent events in the aerospace industry, there is underwriting scrutiny surrounding plane manufacturers and airlines when planes must be grounded. There are other underwriting concerns in the aerospace sector, such as leverage/debt scrutiny, regulatory (FAA) and union contracts. An ability for an insured to appropriately respond to such underwriting concerns will be reflected in their 2024 renewal outcome.
  • Healthcare: Rate outcomes may potentially be more than specified above, depending on claims or M&A activity. There remains some pressure on anti-trust retentions and co-insurance.
  • Life sciences: There is still significant downward pressure on premiums, but renewal outcomes may depend on the level of past adjustments. We are still able to achieve retention reductions in some cases. Companies with a recent IPO may see larger reductions (in the -20% to -30% range, and past higher IPO retentions are regularly being reduced.
  • Natural resources: There has not been significant deviation in the natural resources vertical recently; however, most companies are exposed to commodity prices. Some hedge but others allow themselves to be proxies for the underlying commodity. Given insurance pricing today there is likely less potential for improved pricing and more potential for a tougher market if there is a collapse of oil prices.
  • Technology, media, telecommunications: Semiconductor-specific companies may be in a more challenged space, continuing to see supply chain issues. They generally start at a higher price point compared to other technology companies.

Developments and market driving issues

  • Securities class action (SCA) filing frequency and severity: SCA filings increased in 2023 to 215, nominally up from 208 filings in 2022, with IPO litigation dropping from 50 cases in 2022 to 19 last year, presumably due to diminished IPO activity in recent years (Source: Cornerstone Research and Stanford University, Securities Class Action Filings: 2023 Year in Review). Average SCA settlements nudged up from $39 million in 2022 to $46 million in 2023, while median settlements remained steady at $14 million in both 2023 and 2022 (adjusted for inflation). We caution that settlement data in any given year may not be reflective of current D&O market conditions. They are lagging indicators, often more accurately reflecting facts specific to cases filed in previous years and without reference to the amount of D&O insurance proceeds used to resolve the litigation.
  • Artificial intelligence (AI) as a D&O risk
    • AI — from traditional AI to augmented to fully autonomous AI — presents risks to companies across numerous lines of insurance coverage. As a D&O risk, AI can be used to provide data and support to corporate decision makers, leading potentially to questions as to the adequacy of oversight and due diligence. The adequacy and accuracy of investor disclosures relating to the use and scope of AI are also potential areas of risk.
    • The SEC has initiated two enforcement actions against companies relating to alleged practices known as “AI washing” — or the overstatement or the misleading of investors as to a company’s AI capabilities, or the extent to which the company has incorporated AI into its operations or products.
    • To date, the totality of AI-related D&O liabilities is less known but are sure to be areas of further scrutiny, from the SEC and other regulatory bodies, courts, legislatures or otherwise, going forward.
  • The broader economy has been resilient, yet some macroeconomic factors continue to impact business: The U.S. economy has largely recovered from previous pandemic-related complications. Fears of a recession have diminished, GDP growth has been strong, low unemployment has been lasting, and stock market indices have hit record highs. Nevertheless, interest rates, global hostilities, supply chain and labor supply concerns, as well as lingering inflation are factors that continue to weigh on businesses, with Chapter 11 bankruptcy filings increasing almost 52% year on year. To the extent securities litigation can arise — and has arisen — relative to the adequacy and accuracy of risk disclosures for public companies, D&O risk factors (and insurer losses) are potentially impacted.
  • ESG: SEC’s final climate risk disclosures rule The U.S. Securities & Exchange Commission issued its final climate risk disclosure rule on March 6, 2024. The rule, as adopted, requires registrants to provide detailed climate-related disclosures in their annual reports and registration statements. The rule rolls back several mandates included in the SEC’s 2022 proposed version of the rule, including elimination of the mandate of disclosing upstream and downstream greenhouse gas emissions (GHG) “in the value chain,” the so-called “Scope 3” disclosure requirement. The final rule also attached a materiality standard to disclosures of a company’s other direct and indirect GHG emissions (Scope 1 and Scope 2 emissions).
    • The rule further introduced disclosure requirements relating to board oversight.
    • Within days of the final rule’s issuance, at least nine lawsuits were filed in six different federal courts on behalf of interests ranging from an energy company group asserting the rule goes too far to the Sierra Club asserting the rule doesn’t go far enough. On March 15, the Fifth Circuit Court of Appeals issued an administrative stay, putting the rule temporarily on hold pending the challenge. All challenges will be heard on a consolidated basis by the Eighth Circuit Court of Appeals in St. Louis.
    • The SEC is now among a number of authorities around the world issuing climate-related disclosure mandates, including the European Union and California, both of whose rules are widely considered to be stronger than the SEC’s final rule. Note: California’s rule also is being challenged.
    • On the other side of the ESG divide, anti-ESG backlash at state and federal levels has presented conflicting pressures relating both to climate and diversity, equity and inclusion. Such backlash has included not just legislative efforts to restrict companies from implementing ESG protocols but also shareholder proposals to limit ESG policies.
    • Shareholder litigation has arisen on both sides of the issue. Plaintiffs recently filed two lawsuits against U.S.-based airlines in connection with their purported actions supporting ESG-related initiatives. In another case, the Superior Court for the State of Delaware denied a plaintiff’s books and records demands based on, among other grounds, the board’s lawful exercise of its business judgment in implementing corporate policies.
  • Fiduciary duties of controlling stockholders (In re: Sears Hometown and Outlet Stores, Inc. Shareholder Litigation): In January 2024, the Delaware Court of Chancery addressed duties that a controlling stockholder owes when it exercises its powers as a stockholder — taking actions, such as seeking to remove directors or enacting bylaw changes. In a first-of-its-kind decision, the court introduced a framework designed to help determine when fiduciary duties are owed by a controlling stockholder and to better define the boundaries of those duties. The decision is crucial to controlling stockholders, such as private equity funds, to the extent their actions may require additional analysis of whether newly articulated duties have been satisfied.
  • Final SEC rules relating to SPACs and de-SPAC combinations: In January 2024, the SEC adopted final rules to enhance disclosure and investor protection in initial public offerings by special purpose acquisition companies (SPACs) and in business combination transactions involving shell companies and private operating companies (i.e., de-SPAC combinations). In so doing, the SEC adopted disclosure requirements pertaining to SPAC sponsors, conflicts of interest, stockholder dilution, and board determination and fairness of the transaction to SPAC investors. The new rules also clarify and provide guidance related to potential liability relating to these disclosures. A sharp downward trend in SPAC IPO activity began in 2022, in part due to emerging SEC scrutiny into SPACs and de-SPAC combinations, including the issuance of draft rules. With final SEC rules now in place, we will monitor the extent to which private companies will continue to see de-SPAC combinations as an option to other avenues for going public, including traditional IPOs.
  • Final SEC cybersecurity rules
    • On the heels of the SEC announcing back in March 2023 a package of policies designed to protect the financial system against cyber incidents, the commission adopted rules last summer to require all public companies to disclose all cyber security breaches within four days after a registrant determines that a cybersecurity incident is material.
    • Where the SEC is involved, there are always risks to corporations and their directors and officers which may attract coverage under D&O policies. In relation to investigations by the SEC into possible violations of this new cyber breach disclosure rule, individual insured persons are likely to have broad potential coverage, while corporate coverage could generally be triggered by formal suits or enforcement actions.
    • SEC action against a company and its directors and officers for possible violations of the new rule could lead to derivative suits for failure to adequately oversee cybersecurity and disclosures, while securities class actions could allege that a failure to make a timely disclosure under the new rule is presumptively an actionable material omission. Fortunately, such derivative suits and class actions would likely be fully covered by most (current) public D&O policies.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).


D&O Liability Product Leader
FINEX North America

Management Liability Coverage Leader
FINEX North America

Related content tags, list of links Survey Report Financial, Professional and Executive Risks
Contact us