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Directors and officers
insurance insights 2024

Posted: 04 April 2024

Brendan Husband-Whiting, senior directors and officers liability account underwriter at Allianz, outlines the risks directors and officers are facing and explains why insurance cover has never been so important.

Inflation, high interest rates and supply chain issues have made the last few years challenging for anyone running a business. But, while there are some encouraging signs, directors and officers must still be prepared for the risks associated with a tough economic environment.

Several indicators point to improvements in the economy. Inflation was 4% in January 20241, and, in February 2024, interest rates were kept at 5.25% with the governor of the Bank of England, Andrew Bailey stating that inflation could be back to the 2% target within a few months2.

brendan husband-whiting

Challenging economy

These trends are encouraging but there are still plenty of challenges. While Bailey may be optimistic, inflation remains higher than the Bank of England’s targets and, with the UK economy shrinking by 0.3% in October-December 2023 and putting the country into a technical recession3, this could make it more difficult to balance the economic books.

Interest rates are also significantly higher than in the recent past, which can create a headache for businesses refinancing existing debt.

These challenges have pushed corporate insolvencies up. In February 2024, on the back of Q4 2023 figures showing 7,183 UK insolvencies, the Centre for Economics and Business Research4 revised its forecast for 2024 from 28,000 to 33,000. This level of corporate insolvencies is more than double what was seen in a typical quarter during the pandemic and 75% up on pre-pandemic levels, when the average was 4,100.

Geopolitical issues are also affecting many UK businesses. The Ukraine and Israel-Hamas wars are disrupting supply chains but also raising concerns regarding ESG issues if a business is still active in the affected areas.

On top of this, it’s a record year for elections around the world. This can create further uncertainty and, with a new UK government inheriting a tough economy, directors and officers must be prepared for policy changes that could affect their business.

Emerging risks

As well as dealing with the economic trends that are affecting operations, it’s also important to keep an eye on emerging risks. At Allianz, we identified two key risks which are already being felt in the corporate space, that could begin to affect the directors of smaller businesses. 

Generative AI

Whether you see it as a force for good or evil, or a bit of both, generative AI (GenAI) tools are becoming commonplace. A global survey from McKinsey found that a third of organisations are using GenAI regularly in at least one business function.5

But while this technology can create competitive advantages, there are challenges too. Cybersecurity threats, which are already the top risk among directors of UK small enterprises according to Allianz’s Risk Barometer6, could be heightened by the implementation of GenAI tools.

There is also increased regulatory risk as rules around how this technology is utilised evolve. Likewise, GenAI brings a risk of legal action. This might be due to its inappropriate use, for instance unintended bias, or infringement of existing privacy and/or copyright laws.

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For directors, understanding this technology and having rules in place to ensure it is used appropriately is a must. 


A business’s approach to environmental, social and governance (ESG) issues is increasingly coming under the spotlight, with everyone from employees and customers to regulators keen to see a business is behaving responsibly.

Fail to do the right thing and there’s a risk of legal action. Globally, the number of climate change cases more than doubled between 2017 and 20227. While most cases are brought in the US, UK courts are beginning to see legal action with ClientEarth bringing a case against Shell’s directors in 2023, alleging failure by the board to properly manage climate risk.

Getting to grips with these issues is important, especially as mandatory ESG reporting, which is already in place in the UK for larger organisations, is likely to trickle down to smaller enterprises in the future. Understanding the organisation’s approach to ESG and how ready it is to report to the regulator will ensure it’s prepared for any new requirements.

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Protect your interests

With UK businesses facing so many challenges, D&O insurance is an essential part of every board member’s armoury. Directors are personally liable for their actions and, without protection from a D&O policy, their home and other assets are on the line.

Risks are constantly evolving too. New legislation can mean a director may suddenly find themselves liable for past business activities, as was the case with cladding firms after the Grenfell Tower fire.

On top of that, the risk of litigation increases when economic times are tough as investors and other parties seek to claw back funds. Having protection through D&O insurance can provide considerable reassurance to directors, allowing them to focus on running their businesses in these challenging times.

While D&O insurance is the norm among the directors of large corporates, the executives running smaller companies are beginning to see its importance too. As a result, cover is available to meet the needs of these directors and officers and, after several challenging years, the market is very competitive again. 

Support from Allianz

Allianz Commercial is committed to growing the D&O market, bolstering its well established and respected large corporate D&O team with the creation of three regional mid-corporate hubs, Northern, Midlands/South West and South & London. Focusing solely on Allianz’s mid-corporate D&O and Professional Indemnity propositions, the Hubs will maximise local opportunities and enable underwriters to work closely with branch distribution teams and local brokers.

Alongside this, Allianz has also strengthened its claims proposition, building on the existing large corporate offering by creating a dedicated mid-corporate and SME financial lines claims team. Working in tandem with the financial lines underwriting teams, this additional insight into each customer’s business will enhance claims handling.

In tough economic times, and with new risks emerging to test the nerve of the UK’s directors and officers, a fully supported D&O insurance proposition will give them the confidence to focus on running their business.

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