For policyholders, the landscape of potential risks for directors and officers continues to evolve, including increased use of artificial intelligence tools, environmental and social governance obligations, and the new “failure to prevent fraud” law. Against this backdrop, directors’ and officers’ (D&O) insurance remains a critical part of corporate risk management, yet it continues to generate complex coverage challenges.

In the directors’ and officers’ chapter of the Policyholder Review 2026, partner James Breese and associate Arjun Dhar examine the evolving landscape of D&O exposure and insurance. The chapter brings together emerging trends and insights to help policyholders navigate an increasingly complex risk environment.

Legal updates – securities litigation

Securities litigation remains an increasingly contentious area and merits close attention. An evolving legal, regulatory and technological landscape means it continues to grow as a likely source of claims under D&O policies.

Common issues in D&O claims

D&O policies are frequently written as part of global programmes, with a master policy covering claims in a number of jurisdictions, often on a difference in conditions basis. Issues can arise where there are legal or regulatory differences between the law governing the policy and the law of the state in which the insured peril has occurred.

Composite policies: update following the Bath Racecourse case

A typical D&O policy will include, at a minimum, a single corporate entity and its director(s), whose interests under the policy are several and not joint. This can become increasingly complex where D&O cover purchased by an investment fund is extended to newly acquired subsidiaries or portfolio companies.

Artificial intelligence and D&O cover

We have commented above on some of the risks posed under D&O policies from the perspective of securities litigation arising from allegations relating to the use of, or commentary on, AI. The increased use of AI can also engage a D&O policy in more traditional ways. With over half of UK businesses now adopting some form of AI, the volume of claim notifications is only likely to rise.