D&O market favorable to companies, but wary of AI risks: Allianz

Companies will continue to benefit from a competitive directors and officers liability insurance market, but potential risks, including those associated with artificial intelligence, must be monitored, says an Allianz Global Corporate & Specialty report released Tuesday.

New entrants coming into the market, coupled with the reduced number of initial public offerings, have provided companies with a more favorable D&O market, and “the market looks like it will remain competitive” in 2024, the report says.

The report warns that while developments in GenAI “are exciting, they also carry potential risks,” including cybersecurity threats, increased regulatory risk, demand for more corporate transparency, unrealistic investor expectations and threats over its technology’s responsible use.

Other potential risks trends include the fallout from the U.S. banking crisis, it says. While it appears the banking crisis is over, “we are watching banks with large commercial property portfolios,” with some banks selling property loans at a discount, while the Treasury has its lowest cash balance since 2017, which puts a strain on the banking system.

The report says that ESG claims are here to stay, with deliberation of current issues in corporate management often conflating discussion of ESG principles with corporate sustainability practices.

Last year’s report pointed to recession and other economic issues as a major concern.