AM Best Revises US Directors and Officers Insurance Outlook to Stable

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AM Best has revised its market segment outlook for the U.S. directors and officers (D&O) liability insurance segment from negative to stable, citing factors such as rate stabilization, improving loss ratios, and increased caution from underwriters in assessing risks. The report notes a decline in enforcement activities and a more favorable environment for corporate executives, though claims severity remains a concern.

Why it matters

The D&O insurance market is a critical component of the overall business landscape, providing coverage for corporate leaders and influencing the risk environment for companies. This revised outlook from a leading industry analyst signals a potential stabilization in the D&O market after a period of challenges, which could impact insurance costs and availability for businesses.

The details

According to the report, after years of premium decreases and declining security class action lawsuit filings, rate decreases have moderated, with many renewals shifting to flat or modest adjustments. D&O carriers have also maintained favorable loss ratios, with the direct incurred loss ratio for 2024 being one of the best results seen in over a decade. Underwriters are also demonstrating increased caution in assessing the risks they underwrite, which may result in heightened pressure for rate corrections, especially in the excess layers.

• The revised outlook is based on results through the first nine months of 2025.
• AM Best anticipates modest deterioration in the loss ratio for the full calendar year 2025.

What they’re saying

What’s next

The report suggests that the market will continue to be closely watched over the next few months to see how newer D&O underwriters seeking to grow market share will react to the more selective and conservative pricing approach of established carriers.