2025 reaffirmed Germany’s challenging Directors & Officers (D&O) landscape: managers face unlimited personal liability, even for simple negligence, and more than 90% of claims are internal, brought by companies or insolvency administrators against their own executives. In publicly listed companies, liability can persist for up to ten years after the liability claim comes into existence, making long-tail exposures a reality.
Looking forward
The future of D&O in Germany is defined by intensifying liability risks and structural challenges:
“One pot – many hands” problem
When D&O limits are insufficient, multiple insureds compete for the same coverage pool. This creates conflicts between board members and raises questions about fair allocation. Courts and insurers increasingly face disputes over distribution, and companies are urged to negotiate clear allocation clauses upfront. The Higher Court of Frankfurt ruled in 2025 that the “first come, first serve” principle provides for such fair allocation. A Federal Court decision is expected which may confirm or overrule the Frankfurt decision.
ESG and regulatory pressure
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and Green Claims rules will heighten personal exposure for directors. Missteps in sustainability reporting or supply chain compliance could trigger claims, adding complexity to already strict German liability standards.
Insolvency and internal claims
Insolvency remains a big driver of D&O litigation. Under Sec. 15b InsO, directors are personally liable for payments made after insolvency triggers. The burden of proof lies with managers, and insurers increasingly challenge coverage by alleging “knowing breach”. A clarifying Federal Court decision is expected to come in the next years, too.
Market response
Tighter underwriting is expected and more emphasis on governance, ESG compliance, and cyber resilience. Insurers may push for sub-limits or priority agreements to manage allocation disputes. Companies should review procurement clauses and consider excess layers to mitigate the “one pot” risk.
Outlook for 2026
German boards face a future of heightened personal exposure, complex allocation battles, and evolving regulatory duties. Robust D&O programmes with clear allocation mechanisms and proactive risk management will be critical for resilience in 2026.
