Demand for D&O liability insurance rises 25-35% in FY25, says report

Business Standard

02-05-2025

Increased board accountability, along with investor pressure and regulatory interventions, has resulted in a 25–35 per cent increase in demand for Directors & Officers (D&O) liability insurance in FY25, according to Policybazaar data.
According to the insurance distributor, the trend implies increased awareness among promoters, start-ups and mid-sized companies of the personal liability risks faced by key managerial personnel.
It has also seen nearly 85 per cent renewal in these policies. Policy discontinuation has been minimal, with non-renewals primarily linked to changes such as mergers and acquisitions, changes in shareholding patterns, or company closures.
'What once started as a compliance-driven necessity has now evolved into a cornerstone of proactive risk management. The increasing recognition of D&O insurance as a vital safeguard for leadership reflects a strategic shift in how businesses approach risk,' said Evaa Saiwal, Head of Liability Insurance at Policybazaar.
The average sum insured for D&O insurance for small enterprises (start-ups and SMEs) is in the range of Rs 50 lakh–Rs 2 crore. For mid-sized companies, the average sum insured ranges between Rs 2 crore and Rs 10 crore, with premiums of around Rs 1–5 lakh. For large enterprises or corporates, the average sum insured is more than Rs 10 crore, with premiums over Rs 5 lakh.
'As IPO-bound companies embrace D&O coverage more than ever, we are witnessing a surge in its value—a direct response to the growing prominence of board accountability and the very real threat of leadership liability in today's fast-paced, litigious environment,' Saiwal added.
Other than IPO-bound companies, ESG failures and cybersecurity lapses are emerging as key drivers for D&O demand. There is also an increase in directors asking for D&O policy reviews before accepting board positions, indicating heightened caution around personal liability. Additionally, more businesses are opting for non-rescindable Side A-only excess policies—especially for independent directors—offering broader protection in cases of insolvency or lack of indemnification.
With increased demand, there has also been 10–15 per cent growth in claims, triggered mainly by alleged breaches of fiduciary duties—indicating higher board-level scrutiny, a surge in litigation costs, increased regulatory investigations, and growing concerns around reputation management and crisis response. This highlights the reputational stakes involved in D&O exposures.