Woodruff Sawyer has released its 13th annual D&O Looking Ahead Guide, which examines trends such as securities litigation, the impact of artificial intelligence on disclosure, reincorporation discussions, and regulatory developments.
The guide reports that while securities litigation remains active, dismissals have increased by 74% year-over-year. AI-related disclosure risks are becoming more prominent, but the report suggests that proactive governance and regular updates to risk factors can help reduce exposure.
Topics such as diversity, equity, and inclusion backlash and pauses in Foreign Corrupt Practices Act enforcement have attracted attention but have not resulted in significant litigation.
Priya Huskins (pictured above), senior vice president, management liability at Woodruff Sawyer, noted that the current market is competitive and rates are favorable for buyers.
“When insurance capital is abundant and competition is fierce, it's easy for risk managers to be lulled by a friendly rate environment,” Huskins said. She also noted that despite the calm, there are signs of change in the market.
“It's hard to stay vigilant when things feel good, but this is exactly when boards should be sharpening their focus. The clouds on the horizon may not be stormy yet, but they're worth watching,” Huskins said.
Market conditions currently favor insurance buyers, with D&O premiums returning to levels seen in 2019. There is strong competition among carriers, especially for IPO and SPAC teams, and broad coverage terms are available.
However, the guide cautions that litigation trends and shifts in insurance capital could change the market environment. Captive insurance strategies and Side A-only coverage are also gaining interest in certain segments.
The commercial D&O insurance sector is being shaped by an oversupply of capacity and a complex geopolitical environment. According to market analysts, this has contributed to a softening of pricing and broader coverage terms, while also increasing the focus on environmental, social, and governance (ESG) concerns.
The US saw a rise in securities class action lawsuits in 2024, with litigation rates reaching 4% among US-listed companies, up from 3.3% in 2023.
Litigation risks associated with artificial intelligence are also increasing. The number of AI-related securities filings in the US doubled from seven in 2023 to 15 in 2024, reflecting the growing scrutiny of AI practices and disclosures.
Woodruff Sawyer’s report also highlights shifting governance issues, including debates over the best state for incorporation. Companies are weighing Delaware against alternatives such as Nevada and Texas, which may influence the demand for Side A coverage and the frequency of fiduciary duty lawsuits. Trade policy volatility is also affecting earnings guidance, and recent changes in SEC leadership have led to adjustments in cyber disclosure requirements.
AI risks are a growing concern, with issues such as AI “washing,” misinformation from AI agents, and rapid adoption of new models without full understanding. The SEC is closely monitoring disclosures related to AI.
In addition, the rapid introduction of new trade policies and supply chain rules is creating uncertainty for businesses, making it more difficult for boards and management to provide reliable earnings guidance.
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