A version of this article, by Simon Ashby – Executive Managing Director at MNK Re, was first published in the February 2025 edition of FA News.

2024 was a year where, after a couple of false starts following the pandemic, it seemed that the South African economy may start revving up. Investor confidence nudged upwards as the government of national unity promised economic reforms and the power supply became more consistent after years of damaging blackouts and loadshedding. Nonetheless, 2025 threatens to throw some grit into the gears.

The Rand fell against the dollar following the US Presidential election, reflecting concerns about the impact that 100% tariffs could have on the South African economy, particularly its automotive, mining and agriculture exports. More broadly, greater geopolitical instability is sapping some confidence in the global economy.

That the year started with ArcelorMittal South Africa’s (AMSA’s) announcement that it will close its Longs steel business, only serves to emphasise the operational risks that businesses face. For D&O insurers, a rising risk of insolvency will be one of the key challenges of the next 12 months. With every bankruptcy, we can expect to see more regulatory scrutiny of directors and legal claims for breach of fiduciary duty.

In recent years capital has nonetheless poured into the financial lines sector, keeping the market soft and adding to a tough environment for insurers. However, this rush to invest also highlights that there remains a significant appetite for risk, because of the opportunities available for those that are innovative.

D&O insurers that can offer flexible, more customisable products will emerge as the leaders in a competitive market. Brokers and insurers that focus on emerging risks, such as liability emerging from new environmental requirements, and that use innovative policy wordings to provide competitive pricing at sustainable rates, will be well-positioned for success in the evolving D&O market of 2025 and beyond.

You can read the original article on the FA News website.