These trends are encouraging but there are still plenty of challenges. While Bailey may be optimistic, inflation remains higher than the Bank of England’s targets and, with the UK economy shrinking by 0.3% in October-December 2023 and putting the country into a technical recession³, this could make it more difficult to balance the economic books.

Interest rates are also significantly higher than in the recent past, which can create a headache for businesses refinancing existing debt.

These challenges have pushed corporate insolvencies up. In February 2024, on the back of Q4 2023 figures showing 7,183 UK insolvencies, the Centre for Economics and Business Research⁴ revised its forecast for 2024 from 28,000 to 33,000. This level of corporate insolvencies is more than double what was seen in a typical quarter during the pandemic and 75% up on pre-pandemic levels, when the average was 4,100.

Geopolitical issues are also affecting many UK businesses. The Ukraine and Israel-Hamas wars are disrupting supply chains but also raising concerns regarding ESG issues if a business is still active in the affected areas.

On top of this, it’s a record year for elections around the world. This can create further uncertainty and, with a new UK government inheriting a tough economy, directors and officers must be prepared for policy changes that could affect their business.

With UK businesses facing so many challenges, D&O insurance is an essential part of every board member’s armoury. Directors are personally liable for their actions and, without protection from a D&O policy, their home and other assets are on the line.

Risks are constantly evolving too. New legislation can mean a director may suddenly find themselves liable for past business activities, as was the case with cladding firms after the Grenfell Tower fire.

On top of that, the risk of litigation increases when economic times are tough as investors and other parties seek to claw back funds. Having protection through D&O insurance can provide considerable reassurance to directors, allowing them to focus on running their businesses in these challenging times.

While D&O insurance is the norm among the directors of large corporates, the executives running smaller companies are beginning to see its importance too. As a result, cover is available to meet the needs of these directors and officers and, after several challenging years, the market is very competitive again. 

Allianz Commercial is committed to growing the D&O market, bolstering its well established and respected large corporate D&O team with the creation of three regional mid-corporate hubs, Northern, Midlands/South West and South & London. Focusing solely on Allianz’s mid-corporate D&O and Professional Indemnity propositions, the Hubs will maximise local opportunities and enable underwriters to work closely with branch distribution teams and local brokers.

Alongside this, Allianz has also strengthened its claims proposition, building on the existing large corporate offering by creating a dedicated mid-corporate and SME financial lines claims team. Working in tandem with the financial lines underwriting teams, this additional insight into each customer’s business will enhance claims handling.

In tough economic times, and with new risks emerging to test the nerve of the UK’s directors and officers, a fully supported D&O insurance proposition will give them the confidence to focus on running their business.