Artificial intelligence has become a centerpiece of corporate strategy, and at the same time, of shareholder lawsuits.
Over the past two years, US regulators and plaintiffs’ firms have zeroed in on what companies say (and don’t say) about AI in filings, earnings calls, marketing, and product documentation. The result is a fast-moving wave of “disclosure” litigation, with non-tech companies increasingly in the crosshairs.
As a result, directors and officers (D&O) insurers are intensifying their focus on how companies describe their use of AI and emerging technologies, even though policy language has yet to shift. At least one expert has warned of a rise in disclosure-related claims involving firms that have under- or over-promised what their technology could do.
“Underwriters are looking at disclosures and what companies are representing to the market to their investors,” Rik Goyton (pictured), executive vice president and financial lines practice leader at CAC Specialty, told Insurance Business.
AI-related securities cases are already accelerating. Goyton noted at least a dozen cases in the first half of the year, compared to 15 in all of 2024.
While tech companies are obvious targets, he emphasized that litigation risk cuts across industries as AI now powers hiring, pricing, underwriting, logistics, safety systems, and customer support across sectors.
This ubiquity broadens the plaintiff bar’s target set and complicates controls: a retailer using AI for demand forecasting or a hospital deploying AI triage tools can face the same disclosure risk as a software vendor if public statements overpromise outcomes or under-describe constraints.
“We see it sometimes on the EPL (employment practices liability) side when companies are using AI in terms of their hiring and interviewing platforms. Anybody that's leveraging AI is potentially at risk,” Goyton said.
Cryptocurrency, IPO (initial public offering), and SPAC (special purpose acquisition company)-related lawsuits also remain active. As the IPO and SPAC market rebounds, Goyton expects litigation will follow.
“Those transactions, with their strict liability and Section 33 exposure, inherently drive more lawsuits," he said. "As IPOs and de-SPACs return, we should expect a corresponding rise in litigation.”
Disclosure-focused litigation is nothing new, but each era brings a different trigger, according to Goyton.
“The bread-and-butter securities class action litigation tends to revolve around accounting irregularities and disclosures and 10b5 litigation,” he said.
“But it seems like there's always some new issue driving litigation trends each year, whether it's ESG (environmental, social and governance standards) and the greenwashing, or going back to Y2K and the fears of computer glitches in 2000. Part of that, we suspect, is that plaintiffs are constantly looking for the next angle.”
Insurers are reacting by probing companies more closely on their AI narratives, though this increased concern has yet to be reflected in policy language or exclusionary wording. With investors and regulators increasingly alert to “AI-washing,” insurers want to know that companies’ narratives are backed by evidence and aligned with their actual practices.
Alongside underwriting scrutiny, insurers are managing claims more cautiously. Years of lower premium collections in the D&O market have left carriers under pressure, particularly in excess layers. That pressure is shaping how claims are being resolved.
“It’s almost impossible to separate carriers’ profitability metrics from the way they’re handling claims,” said Goyton. “They’re approaching the process with much more diligence. Things are taking longer, with more intentionality, and there’s greater internal visibility on claims. Many are being elevated to higher levels of authority and approval, and outside counsel is being retained more often, especially by carriers in the mid- to high-excess layers.”
For clients, that can mean more protracted claims negotiations. “They may see more faces on Zoom calls or more bodies at a mediation,” Goyton said. “We view our role as brokers as insulating them from that process, but the reality is claims resolution is taking longer.”
Despite the claims challenges, D&O pricing remains favorable to buyers. Rates are still generally flat to down 5% for 2025 renewals, although the pace of decreases is slowing. However, the litigation landscape requires insureds to exercise greater care in AI- or tech-related disclosures.
“We encourage clients to work closely with their securities lawyers on public documents: their 10-Ks, 10-Qs, and other filings,” Goyton said. “It really falls under disclosure requirements, and it’s critical to ensure consistency and accuracy.”
