2.1
Defense Costs Remain High, Driving Carrier Losses
In recent years, generous coverage terms and high defense costs have contributed to higher losses incurred by some insurance carriers active in the GPL market. Carriers bitten repeatedly by GPL claims may be feeling wary—but at the same time, capacity remains high, driving continued competition.
Coverage for regulatory investigations has been expanding in recent years, to the benefit of investment managers. While regulatory investigations are a relatively low frequency event, fees can add up quickly. After the self-insured retention (akin to a deductible) is exceeded, investigative defense costs can quickly make a big dent in carrier balance sheets. If regulatory scrutiny is lower going forward (see Section 2.2 below), this could provide some welcome relief for carriers, but it will take time for any changing trends to show up in losses.
On defense costs, regulatory lawyers command some of the highest fees of any practitioners, while high-profile litigators are similarly expensive. At the same time, the legal profession appears to be in the early stages of AI-led disruption. While this may drive increased efficiency in legal services over time, we do not expect significant impacts on the GPL insurance market in the near term. For now, asset managers will continue to seek out quality defense lawyers, who will continue to charge market (read: very high) fees.
On defense costs, regulatory lawyers command some of the highest fees of any practitioners, while high-profile litigators are similarly expensive.
2.2
Keeping an Eye on Regulatory Trends
With new Securities and Exchange Commission (SEC) leadership in place, we are watching closely for signs of a fresh regulatory posture toward asset managers. In the first three quarters of 2025, public statements and actions from SEC leadership have been largely focused on crypto regulation. As of this writing, it appears that Reg S-P amendments may become effective for larger firms in December 2025, as planned. Meanwhile, the SEC has filed a handful of legacy enforcement matters against asset managers that were likely investigated under the former administration and approved by the current Commission. At the same time, SEC Chair Paul Atkins has discussed the SEC’s role in facilitating capital formation and opened the door for increased retail investor participation in closed-end funds.
So what exactly can the asset management industry expect from the SEC? Big changes in rulemaking, exams, and enforcement? Or substantial regulatory continuity, with some revisions to certain approaches? It’s too soon to tell. As the picture comes into clearer focus, venture capital, private equity, and alternative investment managers should remain focused on complying with rules on the books, preparing to comply with proposed rules that have not been modified or withdrawn, and ensuring that policies, procedures, and controls remain robust.
2.3
Competitive Pricing Environment Should Continue for Top-Tier Risks; Claims May Drive Pricing Upwards Over Time
The market environment for GPL insurance has remained competitive in 2025. Early in the year, we saw the departure of two major insurers. Despite this, we are still seeing a strong competitive environment due to the large amount of capacity in the marketplace.
Underwriters continue to tell us that claim activity remains high, particularly with issues at the portfolio company level. As a result, there is a tension between high claims frequency and defense costs and downward pressure on rates. How is this playing out in the market?
Underwriters are often attempting to increase rates for VC and PE firms that have recent claims payouts or significant issues at the portfolio company level. Top-tier risks with no prior loss history are generally receiving flat renewals or modest rate reductions.
However, the level of rate relief is less significant than in 2023 and 2024. With effective advocacy, insurers are often receptive to broadening the scope of coverage and adding enhancements during the renewal negotiations.
In 2026, we expect these trends to continue. The GPL market should remain competitive given the large amount of available insurer capacity. We do, however, anticipate that rates will continue to flatten, as many insurers approach their pricing minimums.