Directors And Officers Liability Insurance Sees 35% Growth: What Is It & When Is It Needed?

In boardrooms across the country, a quiet but unmistakable shift is taking place. More directors and officers are beginning to recognise a simple, unavoidable truth, meaning, leadership today carries real personal risk.

According to exclusive data shared by Policybazaar for Business, the sales of Directors and Officers (D&O) Liability Insurance have surged by 25–35 per cent over the past year. This has been prevalent industry-wide and on their platform also. Around 35 per cent of clients were first-time buyers, a sign that risk management is no longer a concern just for big corporations but also for startups, SMEs, and mid-sized companies.

But what exactly is D&O insurance? Why is it seeing such demand now?

At its heart, Directors and Officers (D&O) liability is a protice shield for businesses. It is designed to protect the personal assets of company leaders if they are sued for decisions made while managing a business.

This (cases) could include many things, such as an alleged breach of duty, misstatements, regulatory non-compliance, or even reputational harm. In simple words, it ensures that individuals are not left personally vulnerable when leadership decisions are challenged in court.

The need for D and O coverage has been gaining ground for some time now. However, today’s growth is not just about regulatory obligations. It is about survival and protection in an increasingly litigious world. Opines Evaa Saiwal, Head of Liability Insurance at Policybazaar for Business, “what once started as a compliance-driven necessity has now evolved into a cornerstone of proactive risk management.”

Around 10-15 per cent of Policybazaar’s D&O clients have already filed claims till date with top reasons ranging from alleged breaches of fiduciary duty, spiraling litigation costs, regulatory investigations, and the growing cost of PR and crisis management.

85 per cent of insurance keepers renewed their D&O policies, underlining that once businesses experience the value of protection, they rarely let it go.

So, when is the D&O insurance needed?

The simple understanding is if you sit on a board or run a business where decisions can be questioned, such insurance protects your finances. This is needed by:

• Startups and SMEs entering funding rounds, where investors insist on protection.

• Mid-sized businesses expanding operations and facing growing regulatory scrutiny.

• Large enterprises, especially those preparing for IPOs, where public and shareholder accountability soars.

• Sectors prone to regulatory eyes, such as fintech, healthcare, and increasingly, ESG-sensitive industries.

• Independent directors, who are now more cautious than ever and often demand to review D&O policies before accepting board positions.

Evolving Trends in D&O Insurance

The D&O insurance in India has evolved to meet the above mentioned need of policy buyers. The report notes that businesses are increasingly choosing ‘non-rescindable Side A-only excess’ policies for independent directors, a safer bet if the company can't or won’t indemnify them during lawsuits.

Additionally, there has been a sharp rise in coverage limits particularly among IPO-bound companies.

Startups typically opt for coverage between Rs 50 lakh to Rs 2 crore, with average premiums between Rs 10,000 to Rs 1 lakh. Larger corporations are securing sums insured well beyond Rs 10 crore, with premiums exceeding Rs 5 lakh annually.

For instance, as per data by Policybazaar, companies can expect to pay around Rs 53,974 with Bajaj Allianz General Insurance or Rs 70,458 with ICICI Lombard for standard D&O plans.

Premiums would vary significantly depending on coverage amounts, sectors, and the size of the business.

A worrying trend has also emerged in this insurance segment; ESG failures (such as environmental negligence, DEI lawsuits) and cybersecurity lapses are emerging as key drivers of D&O exposure. This means that what were seen as "soft" risks are now hard threats to leadership reputations and balance sheets.

It seems that D&O insurance is no longer a nice-to-have, rather it is becoming a fundamental part of how companies attract and protect talent, how boards defend their decisions, and how leaders can focus on growth living in fear of personal ruin.