About the author
Marcel Braun is one of the leading D&O and financial lines experts in Germany. He has held senior positions at international insurers and brokerage houses since 2000 and is currently CEO of hendricks GmbH. With over two decades of experience in risk management for executives and companies, he knows the developments in the D&O market like no other. Marcel Braun is also co-author of the specialist book “D&O insurance for companies” and a sought-after contact in specialist circles.
Introduction
Manager liability is under pressure: the number of D&O claims has been rising steadily for years - and with it the uncertainty on the corporate side. Anyone with management responsibility today not only faces rising expectations from stakeholders and supervisory authorities, but also an increasingly complex liability environment.
Whether project failure, incorrect use of funding or breaches of compliance obligations - the list of possible grounds for claims is long. Added to this are stricter regulatory requirements and a growing willingness on the part of creditors and insolvency administrators to take legal action. What is particularly alarming is that former managers are increasingly being targeted.
This article highlights current developments in D&O claims practice using specific data from the hendricks claims database. It shows which pitfalls are particularly relevant in practice - and what this means for the design and management of insurance cover.
is one of the leading D&O and financial lines experts in Germany. Since 2000, he has held senior positions at international insurers and brokerage houses, currently as CEO of hendricks GmbH. With over two decades of experience in risk management for executives and companies, he knows the developments in the D&O market like no other. Marcel Braun is also co-author of the specialist book “D&O insurance for companies” and a sought-after contact in specialist circles.
I. Rising Expectations and New Challenges
The D&O insurance sector recorded a noticeable increase in claims in 2023.
According to the German Insurance Association (GDV), the number of cases rose by nearly seven percent to 2,200.
On average, insurers paid out just under 100,000 euros per case, totaling about nine percent more than the previous year.
The GDV sees a clear connection to the rise in corporate insolvencies, which increasingly expose managers to liability claims.
Tightened compliance requirements also continue to result in significant liability risks.
An analysis of the Hendricks claims database shows how the risk landscape, and particularly D&O claims, have evolved in recent months.
Around 500 claims cases from the period 2019 to 2024 were evaluated.
D&O insurance cases are complex and usually involve significant legal uncertainties.
Only about seven percent of reported D&O cases show a clear liability situation.
Unsurprisingly, around 70 percent of payouts from D&O policies are for legal advice and litigation costs.
More than 90 percent of D&O proceedings for damages end in a settlement, though often only after a lawsuit has been filed.
The rarity of final court judgments suggests that parties generally seek a quick and discreet settlement to avoid costs and public attention.
Settlement durations vary greatly depending on company size: in medium-sized businesses, D&O proceedings take about three years on average, while in large corporations they last around seven years.
The long durations are mainly due to multi-instance liability disputes and frequent coverage defenses based on allegations of intent.
In the past three years, there has been a dramatic increase in the number of cases involving former executives.
Whereas in 2021 about 80 percent of the managers facing claims were still employed by the company at the time of the claim, by 2024 this figure had dropped to only around 30 percent.
The data shows that more and more cases fall within the extended reporting periods of previous policies.
Particularly when adjusting insurance layers within existing coverage, gaps in coverage can arise if not all aspects are properly considered.
Such gaps can lead to significant problems in the event of a claim.
II. Liability Claims – The 10 Most Common Reasons
The ten most common reasons for liability claims highlight the potential risks and challenges faced by executives.
1. Project Errors
Project errors are among the most frequent causes of liability claims.
They occur when deficiencies in project management, such as inadequate planning or mistakes during execution, lead to financial losses.
Especially complex projects carry a heightened risk, as coordinating multiple departments or external partners often results in misunderstandings and poor decisions.
2. Inadequate Organization and Supervision
Ensuring proper organization and supervision of operational processes is a key duty of executives.
Deficiencies in internal organization or insufficient oversight can give rise to liability claims.
Implementing a compliance system to ensure adherence to legal requirements is particularly important in this context.
3. Insolvency-Related Claims
Liability associated with insolvencies is a common risk for managers.
Typical reasons for claims include allegations of delayed filing for insolvency or continued payments despite insolvency.
Violations of capital maintenance rules can also lead to substantial claims.
4. Criminal Investigations and Regulatory Proceedings
Managers face not only civil but also criminal liability risks.
Investigations and proceedings initiated by criminal authorities for offenses such as breach of trust or fraud can place significant strain on the affected executives.
5. Tax Issues Unrelated to Insolvency
Tax-related violations are also frequent causes of liability claims.
Errors in tax returns, failure to pay taxes, or incorrect accounting statements can result in back payments and penalties.
6. Antitrust and Data Protection Violations
Violations of antitrust laws and data protection regulations, particularly under the GDPR, are increasingly leading to fines.
Illegal price-fixing agreements or improper data handling can result in companies and their executives being held accountable.
7. Repayment of Subsidies, Grants, and COVID Aid
Managers can be held liable for violations of the conditions attached to subsidies or state aid programs.
Repayment claims may arise if funds were misused or if required documentation is missing.
Errors in applications or failure to meet deadlines can also trigger recourse claims.
8. Investigations by Financial Regulators
Companies in the financial sector are regularly reviewed by authorities such as BaFin or the ECB.
Violations of regulatory requirements can lead to substantial sanctions and liability risks for responsible managers.
9. Inadequate Risk Management and Insurance Coverage
Executives are obliged to establish appropriate risk management and insurance strategies for their companies.
If potential risks are not sufficiently covered or insurance policies are lacking, this can give rise to damages claims.
10. Errors in M&A Transactions
Mistakes during M&A transactions — particularly regarding due diligence or purchase price assessments — can cause significant financial losses.
In such cases, managers are liable for insufficient or incorrect risk evaluations.
III. Conclusion
The vast majority of D&O cases are highly complex and involve a wide range of liability risks for managers.
Even though nine out of ten D&O proceedings end with a settlement, the processes usually take several years and entail high costs, especially for legal advice.
The increasing share of former executives being held liable presents a particular challenge for the insurance industry.
A well-structured strategy for insurance transitions is crucial in such cases to avoid coverage gaps, even in complex liability situations.
