Insurers that cover executives and boards of private-credit firms are preparing for an escalating legal and regulatory storm, according to insurance executives and industry data, as mounting scrutiny of the $1.7 trillion industry prompts some carriers to raise premiums and tighten policy terms.
The preemptive moves by the insurance sector signal that market participants expect the current wave of government investigations, investor lawsuits, and valuation disputes to generate significant liability costs for fund managers. At insurance broker Marsh, premiums for renewals of directors-and-officers policies covering private-credit and private-equity firms rose 3% in the first quarter of 2026 compared with a year earlier, managing director William Fahey said. For public companies overall, premiums were generally flat over the same period, he said.
Executives at several carriers told the Wall Street Journal that they anticipate double-digit percentage increases in premiums from a year ago for the private-credit segment and are tightening coverage terms for renewals and new policies.
“There’s more acute risk at the moment, and you don’t know how that’s going to flow through,” said David Guild, head of financial lines at insurer MSIG USA.
The insurance tightening comes as private-credit firms confront a trifecta of pressures. A surge of redemption requests from investors anxious about the health of their loan portfolios has raised questions about whether fund managers are accurately valuing their holdings. Those concerns have been amplified by the funds’ exposure to software companies that some worry may be rendered obsolete by artificial intelligence, a dynamic MSI has covered in the context of rising energy demand and utility battles.
“We just need to remain absolutely vigilant, cautious and diligent,” said Macy Steers, co-head of financial lines at CNA Insurance.
Federal prosecutors are investigating the valuation practices at a BlackRock private-credit fund that surprised investors with a sharp write-down of its loan portfolio, according to people familiar with the matter. The Securities and Exchange Commission has opened enforcement investigations into several large private-credit managers. Regulators have also probed the exposure that banks have to the industry.
Private-credit executives have said the fears are overblown, but Apollo Global Management Chief Executive Marc Rowan last month acknowledged the need for greater transparency on fund values to engender trust. Rowan said Apollo plans to offer daily pricing for its private-credit funds by the end of September.
A flurry of lawsuits tied to private credit has followed the collapses of several companies where fraud was alleged. Josh Naftalis, a partner at law firm Pallas Partners and a former prosecutor in the Manhattan U.S. attorney’s office, said the industry should expect more litigation and regulatory scrutiny.
“The private-credit story is going to continue,” Naftalis said.
Adding to the legal risk is a proposal by the Trump administration intended to open 401(k) and similar retirement plans to private credit, private equity and other alternative investments. The Labor Department said earlier this year that plan sponsors that follow prescribed processes would have a “safe harbor” aimed at protecting them against lawsuits. Critics of the proposal have argued that exposing retirement savers to illiquid, opaque assets could generate litigation if the investments suffer losses.