Increased scrutiny and corporate accountability, alongside heightened regulatory pressures, have driven up claims for Directors and Officers (D&O) Liability insurance by 32% in 2024-2025, based on an August 2025 report by Marsh India.
The rise was mainly seen in the banking, financial services, and insurance sector, which accounted for more than 50% of the total claims for the past four years.
Marsh India reported that these claims frequently arose from civil proceedings against bank officials, as borrowers whose accounts were declared as non-performing assets disputed the enforcement of loan securities.
In addition to the banking sector, IT, manufacturing, and pharmaceutical clients saw large and complex claims related to fiduciary duty, breach of regulatory provisions, and unfair employment practices.
Law enforcement agencies – such as SEBI, the Registrar of Companies, the Competition Commission of India, the Enforcement Directorate, and the Economic Offences Wing – have also ramped up regulatory investigations against directors and officers of banks, including alleged malpractices of insured organisations.
Sanjay Kedia, Marsh McLennan India’s CEO and Marsh India President, stated that the surge reflects the “rising accountability pressures on corporate leadership.”
Given these rising exposures, Kedia further underscored the accompanying costs in D&O claims, which cover defence costs, settlements, or civil fines and penalties, impacting individuals and organisations.
Notably, the largest D&O claim payout resulted from an employment practice class action in the United States, reaching US$8m. Meanwhile, in India, claims due to regulatory actions, police investigations, and stakeholder proceedings reached as high as US$350,000, according to Marsh India.
Anup Dhingra, Managing Director for FINPRO in India, Middle East, and Africa at Marsh, explained that “this trend highlights the urgent need for boards to strengthen governance frameworks, enhance transparency, and ensure they are protected through comprehensive D&O coverage.”
While risks for D&Os were largely centred on the workforce, government and regulatory actions, marketplace or vendor, as well as creditors and investors, Marsh India noted the impact of artificial intelligence (AI) in introducing new liabilities to the sector. These include algorithmic bias and discrimination, data privacy and AI misuse, misstatements to stakeholders, and cybersecurity.
As such, Marsh India stressed the importance for investors and boards to focus on responsible AI governance and establish oversight mechanisms that prevent potential allegations linked to the misrepresentation of its use.
“As risks evolve, Indian companies need to focus on proper coverage and adequate insurance limits and adopt robust governance practices to safeguard leadership and build stakeholder trust,” Kedia said.
