Marsh reports that the UK directors and officers liability (D&O) insurance market remains buyer-friendly for the majority of insureds through 2025, though the rate of premium reductions slows compared with 2024, particularly in the second half of the year, according to the broker's UK directors and officers 2025 pricing index. Insurers begin to show greater risk selectivity based on perceived price adequacy and insured risk profile, while underwriters express concern over potential systemic exposure to risks that became more conspicuous during the year, including economic stresses, the impact of artificial intelligence and cyber breaches. Marsh data shows that, despite four consecutive years of declining premiums, 2025 D&O pricing remains around 35 per cent higher than 2020 pricing, down from 2024 when prices were around 46 per cent higher than in 2020. Quarterly reductions ease through the year, from 8.4 per cent in the first quarter to 7.1 per cent in the second and 5.7 per cent in the third, before carriers become more competitive in the run-up to year-end and prices fall 9.0 per cent in the fourth quarter. Primary layers remain the most competitive segment of the market, with many insureds achieving improved rates and stronger primary wording. Excess and, particularly, Side A difference in conditions (DIC) markets exhibit a deceleration in price reductions, with carriers managing line sizes and attachment points for portfolios where claims or emerging exposures present higher prospective loss or volatility. Public companies record an average rate reduction of 11 per cent for 2025. Total programme reductions reach 9.4 per cent for FTSE 100 companies and 9.2 per cent for the FTSE 250, while public US-exposed companies see 9.5 per cent and public non-US-exposed companies 11.8 per cent. Private companies continue to see reductions, though at a lower rate than in 2024 and typically more modest than for listed companies. Artificial intelligence emerges as a central underwriting theme, with underwriters treating it as both a technical and systemic risk. Buyers heavily engaged in AI-driven activities are increasingly expected to disclose model governance and validation practices at renewal, and some carriers implement AI-specific questions in submissions and request board oversight statements. On the regulatory side, the failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023 comes into force in 2025, adding to the enforcement powers of a more aggressive Serious Fraud Office. A slower than expected return of initial public offering activity reduces the expected inflow of new public risks into the market, concentrating insurer attention on the existing public book. Looking ahead, Marsh expects the market to remain fluid and materially influenced by claims severity trends, including increased UK securities litigation under section 90A of the Financial Services and Markets Act 2000, regulatory and enforcement activity across several jurisdictions, the liability implications of AI adoption, and the pace of capital markets recovery. Insurers are signalling limited headroom for further material rate reductions in certain layers, particularly excess and Side A DIC positions where claims costs and volatility have compressed margins. Marsh also reports an influx of US buyers accessing the UK market for excess D&O capacity in the first half of 2026, replacing reduced US lines where insurers are closing or remediating their portfolios.
