The unprofitable directors’ and officers’ (D&O) market will continue to struggle next year, according to Allianz Global Corporate & Specialty (AGCS).

So-called “bad news” litigation not linked to financial results is becoming more prevalent, further exacerbating the already challenging claims environment.

“Scenarios include product problems, man-made disasters, environmental disasters, corruption and cyber-attacks,” AGCS says in a report.

“These types of ‘event-driven litigation’ cases often result in significant securities or derivative claims from shareholders after the bad news causes a share price fall or a regulatory investigation.”

The impact of climate change, bankruptcies and the political and economic climate are the other factors that could also further strain D&O insurers.

On climate change, AGCS says a failure to keep investors updated on potential financial implications linked to global warming could result in legal action.

“Climate change cases have already been brought in at least 28 countries to date, with three-quarters of those cases filed in the US,” AGCS says.

“There are an increasing number of cases alleging that companies have failed to adjust their business practices in line with changing climate conditions. Environmental, social and governance failings can cause brand values to plummet.”

Click here to read the full report.