Cost drives D&O insurance choices despite rising litigation worries

AI was ranked least amongst their worries.

Nearly eight in 10 directors and officers in Asia consider regulatory breaches a major concern, according to Willis, a WTW business, in collaboration with Clyde & Co.

Whilst cyber-attacks and data loss remain amongst the top three risks in Asia, health and safety concerns have dropped from the top spot in 2024 to fourth place this year. 

James Cooper, partner and head of Financial Institutions and D&O at Clyde & Co, emphasised that directors and officers face an increasingly complex risk environment shaped by geopolitical shifts, technological advancements, and economic challenges. 

“So too is ensuring that protections such as D&O insurance reflect this changing environment and can adequately cover areas where leaders may feel more exposed such as cyberattacks or data loss,” Cooper said.

Climate change, previously a key issue, is no longer amongst the top seven risks in the region.  

The survey also highlighted a gap in board expertise regarding cybersecurity and data privacy, despite 72% of respondents in Asia viewing these as critical risks. 

Artificial intelligence ranked the lowest in terms of perceived business impact and board expertise, with only 56% considering it a major issue.  

Civil litigation and third-party claims were identified as top concerns for the first time since 2018, with 65% of respondents citing them as significant risks. 

Smaller companies with revenue under $50m, as well as firms earning between $1b and $5b, expressed greater concern over litigation. 

Larger companies with revenues exceeding $5b prioritised diversity, equity, and inclusion, along with bribery and corruption risks, whilst smaller firms were more focused on financial distress and insolvency.  

Namit Mahajan, head of Financial, Professional & Executive Risks (FINEX) Asia at Willis, noted that Asia’s complex regulatory landscape makes compliance a top concern for directors.

“Despite increasing concerns over litigation risks, cost remains the dominant driver for D&O insurance purchasing decisions. This trend persists even as regulatory scrutiny and shareholder activism increase global liability exposures,” Mahajan stated.