MANAGEMENT LIABILITY UK-EU MARKET UPDATE Q1 2026
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Key takeaways
Competitive pricing underpinned by strong appetite – Capacity remains abundant and insurers continue to chase growth across both core D&O and ancillary ML lines. Competitive pressure and premium‑income targets are sustaining rate stability, reflected in a further 16% reduction in average premium across the Lockton book in 2025. It remains to be seen if this trend will continue, so now is a good time to review and analyse your D&O covers to protect you from any potential market volatility.
Market consolidation accelerates – A series of high‑profile acquisitions over the past 12–18 months has reshaped the insurer landscape. While the immediate impact on buyers is limited, historic precedent suggests consolidation can compress total available capacity over time.
Claims pressures continue to build – Cyber incidents, emerging AI‑related exposures, and geopolitical volatility are expanding the range of D&O claim triggers. Claims volumes increased by 34% in 2025 across the Lockton book, driving a marked escalation in overall loss pressure.
Pricing increasingly out of step with risk – Reported matters continue to rise while premiums trend downward, widening the disconnect between underlying exposure and insurer pricing behaviour. This imbalance is putting pressure on profitability and may signal a shift in market conditions ahead.
Market overview
The Management Liability (ML) Insurance market continues to favour clients, with a broadly stable trading environment. Strong capacity levels, sustained competition among carriers, and continued appetite for growth have kept trading conditions favourable across much of the market. Nevertheless, an increase in insurer consolidation and rising claims activity suggest that this period of calm may not be permanent.
Sustained pricing stability
Market conditions of 2025 have continued into 2026. In most cases, premiums are either reducing or holding stable – a product of the ample capacity available for most risks. Across our own book, average premium per policy reduced by 16% in 2025, following a 9% reduction in the year prior. Some insurers are now reaching minimum premiums on risks which have experienced multiple renewals with reductions. This aligns with insurer feedback that pricing is reaching the pre-hard market levels of 2019.
This abundance of capacity is a product of the strong insurer appetite across the market. Most carriers are actively seeking to grow and are under pressure to meet premium‑income targets in a reducing‑rate environment. With competition intensifying, insurers are writing more business to maintain top‑line growth, and are increasingly looking beyond core D&O to ancillary ML lines to support broader portfolio expansion.
Coverage trends
In the past 12–18 months, the D&O market has experienced a wave of notable consolidation. This includes AIG’s acquisition of Everest’s retail portfolio and Starr’s acquisition of IQUW (both October 2025), Sompo’s completed purchase of Aspen and the sale of Rising Edge’s ML portfolio to K2 (both February 2026), and Zurich’s recently announced acquisition of Beazley (March 2026).
While the longer-term effect of this remains unclear, consideration of these developments should feature in pre-renewal strategy for all clients in 2026. In the short-term, we do not anticipate this consolidation to have an immediate impact on clients; however, previous consolidation between significant capacity providers in the D&O market has ultimately resulted in a reduction in the total capacity available, with subsequent impacts on the competitive landscape.
Claims and notifications
There is no sign that the frequency or severity of D&O claims is reducing, with some insurers indicating that claims activity is reaching (and in some territories, exceeding) the levels preceding the hard D&O market of 2019-2020. Claims volumes rose by 34% in 2025, highlighting the continued escalation in underlying risk.
Recent high‑profile UK cyber incidents have sharpened scrutiny on cybersecurity oversight, with regulators and claimants increasingly examining whether boards understood, governed, and disclosed their organisation’s cyber risk posture and response planning. The rapid adoption of AI technologies adds further complexity; AI-related litigation is likely to become a material D&O risk driver over the next 12 months, with claims centred on alleged overstating of AI capability, and governance and oversight failures with regards to AI decision making. To mitigate risk, it is critical that organisations pay close attention to how both their D&O and cyber policies are structured and correlate.
Geopolitical and macroeconomic developments are also emerging as meaningful sources of D&O exposure. Global trade disruption, regulatory interventions, and shifts in US political policy – particularly around DEI reporting – continue to drive uncertainty. These are driving increased costs and financial volatility, and heightening the risk of claims relating to disclosure failures, mismanagement, and regulatory breaches. In tandem, an uptick in geopolitical conflict (as witnessed in the co-ordinated US‑Israeli strikes on Iran and widespread Iranian retaliatory attacks) can often correlate with heightened cyber activity. This increases the likelihood that boards will face questions over their risk disclosure and resilience planning.
Notably, recent years have seen a widening divergence between claims frequency and pricing levels. While reported matters have climbed steadily in recent years, average premiums have trended downward since their 2022 peak. This growing gap suggests a market that is pricing risk increasingly out of step with actual claims activity.
Compounding this trend, our internal data shows that even as notifications rise, the number of matters closing continues to fall. This indicates that D&O claims are staying open for longer, extending the lifecycle of losses and increasing the ultimate cost of each notification. Prolonged claim durations also tie up carrier resources and capital, further pressuring profitability.
At the same time, inflation over the period shown has materially increased the cost base for insurers. Law firm rates have risen significantly, driving higher defence-cost burn rates and increasing the severity of even medium‑complexity matters. These structural cost pressures are not reflected in the downward premium trend, intensifying the imbalance between income and exposure.
Outlook
Taken together, the data points to a market where underlying risk indicators are strengthening, yet insurer pricing behaviour continues to appear disconnected. This raises the question: is this sustainable, or will D&O conditions begin to turn from their recent softening?
If current pricing levels remain out of step with claims activity and defence cost inflation, we expect insurers to begin re‑assessing appetite and pricing discipline over the coming renewal cycles. Adopting a strategic approach – by engaging early, challenging programme design, and demonstrating effective governance – will ensure organisations are best placed to navigate any market recalibration.
Talk to us
We pride ourselves on our collaborative approach, working closely with our clients to provide comprehensive risk transfer solutions. We utilise our extensive network of insurance providers to match you with the right terms and protection layers for your risk, ensuring your coverage is comprehensive across product lines. In the unfortunate event of claim against you or a member of your board, our experts are on hand to guide you towards a prompt and complete recovery.
For more information, or for support to quantify your risk and procure insurance, reach out to a member of our Management Liability team.
