Asia-Pacific directors face a tougher insolvency and geopolitical backdrop even as the region’s D&O insurance market remains unusually soft and competitive, according to Allianz Commercial’s latest Directors and Officers (D&O) insurance insights report.
The region’s overall commercial D&O market is continuing to contract, with rate erosion, muted new business and increasingly cost-conscious buyers tightening margins.
This is being driven by a surplus of global capacity targeting Asia-domiciled risks, which is pushing premiums down and widening available cover.
As companies scrutinise spending, clients are running more tenders and remarketing programmes to secure cheaper terms. That, in turn, is fuelling intense broker competition, downward rate pressure and softer conditions such as lower deductibles and wider cover.
“We are seeing more clients cutting insurance spending and being more cautious about costs,” said Josephine Tam, Head of Financial Lines and Cyber in Asia at Allianz Commercial. “This is driving a lot of tenders and remarketing by clients seeking more economical solutions.”
Cost considerations appear to be shaping buyer decisions across the region more broadly. A WTW–Clyde & Co survey found that 58% of Asian directors cited cost as the primary factor determining the amount of D&O cover their organisations chose to buy.
On the risk front, claims frequency in the Asia-Pacific, whether local claims or US securities actions against Asia-domiciled firms, remains low. However, Allianz is seeing higher severity on prior-year notifications now reaching settlement, which is taking some of the shine off the otherwise low claims environment.
Even so, Tam says the current environment still presents an attractive entry point for first-time buyers. “It is a good time for new potential buyers to consider purchasing D&O insurance because of the solutions and choices they can obtain in this market,” Tam adds.
Insolvencies set to climb
Beneath today’s buyer-friendly market conditions, the underlying credit cycle is turning less favourable for boards. Allianz Trade forecasts that Asia-Pacific business insolvencies, which fell 6% in 2023, will return to sustained growth: up 3% in 2024, 6% in both 2025 and 2026, and a further 2% in 2027. That implies a multi-year period of rising failures in a region that had, until recently, looked comparatively resilient.
Globally, the picture is similarly strained. Allianz forecasts consecutive years of rising business failures, with insolvencies up 7% in 2023, 10% in 2024, and projected to rise a further 6% in 2025 and 5% in 2026, before easing slightly in 2027.
Insolvency is a core driver of D&O claims, particularly for private and mid-sized firms, as creditors, investors, and bankruptcy trustees increasingly look to recover losses from individual directors and officers.
Allianz flags familiar pressure points, including automotive, construction, retail and consumer goods, where thin margins, higher rates and disrupted supply chains make missteps more likely and more heavily scrutinised.
Geopolitics as a D&O trigger
The geopolitical backdrop is emerging as another significant source of latent risk for Asia-Pacific corporates. Allianz notes that 2024 marked the highest number of state-based conflicts in seven decades, with recent estimates counting 21 conflicts in Asia alone, compared with 45 in the Middle East and North Africa, 35 in the rest of Africa, seven in Europe and six in South America.
This widespread instability is increasingly spilling over into commercial decision-making. Conflicts, sanctions and trade barriers are driving companies to restructure value chains and, in many cases, to expand their US footprint to mitigate tariff exposure. In a Bank of America survey of 1,200 firms, about 60% expect production to continue reshoring to the US if tariffs remain high, with industrial gas, semiconductors, pharmaceuticals, autos, technology and food retail among the sectors seeking more capacity there.
These dynamics are filtering down to exporters as well. In Allianz Trade’s May 2025 survey, 42% of exporting companies expected turnover to drop by 2-10% over the next 12 months due to tariffs and protectionism, while almost two-thirds planned to seek new markets for exports and supply. Boards face tougher questions over tariff strategy, customs compliance and disclosure, which are all fertile ground for regulatory and D&O exposures.
“From a D&O liability perspective, trade tariffs can bring an additional risk of regulatory investigation and enforcement actions, and litigation for private companies,” says Sarah Geraghty, Global Underwriting and Mid-Corp Product Lead of Financial Lines at Allianz Commercial.
Outside of geopolitics, technology themes like cyber and AI are rapidly becoming core boardroom liability drivers worldwide.
Allianz’s latest analysis of large cyber losses (claims above €1m) shows a marked shift in the types of events driving the highest payouts. In 2024, attack-driven incidents involving data exfiltration made up a substantial share of total claims value, and their share increased again in the first half of 2025. These higher-value breaches tend to carry the greatest governance implications, as they often lead to heightened scrutiny of cybersecurity oversight and disclosure practices at the board level.
The report also cites “AI-washing”, overstating capabilities or downplaying limitations, is emerging as a liability risk, particularly as regulators and investors scrutinise how companies describe and deploy AI. Since the first AI-related securities class action in March 2020, 53 lawsuits have been filed, including 12 in the first half of 2025, alongside enforcement actions such as the SEC’s case against Nate, Inc.
“Emerging areas like AI have the potential to drive a significant increase in directors and officers liability in the future,” says Sandy Codding, Head of Portfolio Steering for Financial Lines, North America, at Allianz Commercial.
