The D&O market for financial institutions in Europe is far from settled. “Across Western and Central Europe, markets are generally softening,” said Ingo Trede (pictured right), director at MGA Alta Signa. “Eastern Europe - especially Poland - is less competitive, largely due to the political situation and significant government ownership in financial institutions.”
Capacity has surged, with existing carriers increasing line sizes and new entrants focusing on core economies. Facultative reinsurers are also adding to competitive pressures. “That keeps prices and conditions under heavy pressure,” Trede said. “We’re seeing broadening coverage at the same time as pricing continues to soften, a disconnect that underlines the need for underwriting discipline.”
Trede sees regulatory investigations, especially around anti-money laundering and know-your-customer rules, as a major driver of liability. “These risks are particularly acute in fintech and digital banking,” he said. Despite the heightened exposure, AML exclusions are sometimes being removed because of market softness.
Cyber-related and financial crime losses are also emerging in the D&O context, particularly where weak supervision or inadequate controls are alleged. Notifications linked to IT failures and procurement errors are becoming more common, while long-tail claims from Southern Europe are resurfacing, drawing attention to historical exposures.
“Unlike during past crises, we haven’t had a single systemic event triggering widespread claims across the industry in recent years,” Trede said. “That absence helps explain why capital keeps flowing into the market, but it’s no reason for boards to let their guard down.”
While ESG scrutiny is high on industry agendas, Trede notes that actual D&O claims remain absent. “We’ve not yet seen any European claims for greenwashing,” he said. “Part of the challenge is that there’s no standardised ESG or ‘green’ compliance framework.”
Regulatory attention to cyber resilience is more tangible. The European Central Bank’s increasing focus on data protection and the new Digital Operational Resilience Act (DORA) are prompting financial institutions to reassess systems and supervision. “Clients are asking for benchmarks on limits and coverage,” Trede said, “and they’re aware that cyber-related failures can create D&O exposures.”
Newer, less quantifiable risks, from AI governance to cross-border regulatory divergence, are on underwriters’ radars. “AI appears in cyber underwriting questionnaires, but it’s still hard to frame in policy language,” Trede said. “It’s a tool that can be used defensively as well as offensively, so the challenge is defining it precisely enough to manage contract certainty.”
He warns that despite these rising exposures, underwriting practices have not materially tightened. “We’re in a phase where coverage is broadening and pricing is softening, that’s not a sustainable combination. If a triggering event hits, whether from capital market losses, a claims surge or both, the market could face a systemic correction.”
Eastern Europe remains the outlier in an otherwise soft market. Persistent political instability, different governance structures, and higher state ownership create unique exposures. “When directors are politically appointed, changes in government - from right to left or left to right - can lead to corruption allegations and increased claims frequency,” Trede said.
Misaligned international regulatory regimes also raise the stakes. “Russian sanctions and conflicting rules between Europe and the US make compliance very complex for multinational boards,” he explained. “You can be compliant in one jurisdiction and in breach in another.”
While such tensions have yet to produce major D&O losses, Trede believes the potential for disputes is growing. “If I were a director, I’d keep a very close eye on the political landscape wherever my company operates. Those shifts can change your risk profile overnight.”
