Best’s Market Segment Report: AM Best Revises Outlook on US Directors and Officers Insurance Segment to Stable From Negative

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best is revising its market segment outlook for the U.S. directors and officers (D&O) liability insurance segment to stable from negative, citing rate stabilization and improving loss ratios, among other factors.

The Best’s Market Segment Report, “US Directors and Officers Liability Insurance,” states that after years of premium decreases, declining security class action lawsuit filings as the annual number of initial public offerings (IPOs) and special purpose acquisition companies (SPACs) has lessened, in addition to abundant capacity attributable to new market entrants, rate decreases have moderated, with many renewals shifting to flat or modest adjustments. Additionally, D&O carriers have maintained favorable loss ratios, with the direct incurred loss ratio for 2024 being one of the best results seen in over a decade. Based on results through the first nine months of 2025, AM Best anticipates modest deterioration in that loss ratio for the full calendar year.

D&O insurance carriers also are demonstrating increased caution concerning the risks they underwrite, according to the report. Underwriters are placing greater emphasis on assessing financial stability and governance practices of companies they consider for coverage.

“This cautious approach likely will result in heightened pressure for rate corrections, especially within the excess layers,” said Elizabeth Blamble, senior financial analyst, AM Best. “Marginal shifts in the loss ratio and annualized direct premiums also suggest a potential tightening of margins that bears watching over the next few months. What is unknown is how newer D&O underwriters seeking to grow market share will react to established carriers being more selective and conservative with their pricing.”

Other takeaways in the report include:

A notable decline in enforcement activities signifies a pivotal transformation in the regulatory landscape. As a result, many companies have seen a substantial reduction in their potential liabilities in what has become a more favorable environment for corporate executives.
Claims severity, which has long been a concern within the D&O market and is being significantly influenced by the prevalence of substantial mega-settlements, is anticipated to continue being a meaningful market factor in 2026.
Changes in technology, including artificial intelligence, and the rise of cyber incidents, along with geopolitical, economic and environmental factors are transforming the market and present risks to D&O writers.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=362320.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.