Aon's Year in Review Highlights Securities Litigation Trends and AI-Related Risks

Aon's Financial Services Group has published its 2024 Year in Review, spotlighting key developments in executive liability across litigation, enforcement, and insurance coverage. The report shows a modest uptick in federal securities class action filings—225 cases in 2024 compared to 215 the year prior. However, both average and median settlement values declined, which Aon attributes to fewer large settlements and more cases involving bankrupt or delisted companies that typically settle for less.

According to the data, nonfinancial misstatements remain a driving force behind many of these filings. About 81 percent of cases in 2024 involved allegations unrelated to financial disclosures, continuing a trend seen over the past few years. Most settlements, Aon noted, took place during the discovery phase, echoing patterns from 2022 and 2023.

Artificial intelligence took center stage in several headline-grabbing cases. According to the report, companies are facing increasing scrutiny over how they describe artificial intelligence (AI) capabilities. Aon cited instances where firms allegedly overstated their use of AI—claims that sparked both Securities and Exchange Commission (SEC) enforcement actions and private litigation. In some cases, penalties included not only civil fines but also criminal charges.

Cyber-security disclosures also remained under the microscope. The SEC charged four companies with making materially misleading statements related to cyber incidents, levying penalties ranging from just under $1 million to $4 million. Per Aon, regulators are placing growing importance on timely and accurate cyber-risk disclosures.

Meanwhile, the US Supreme Court issued rulings that could have far-reaching effects on regulation and employment law. Most notably, the court overturned the Chevron doctrine, instructing federal courts to interpret ambiguous statutes on their own rather than deferring to agency interpretations. This change may significantly alter how courts evaluate regulatory authority.

On the insurance front, the report examined how courts continue to grapple with what constitutes a "claim." Aon summarized several cases in which prelitigation letters and subpoenas were contested as coverage triggers—with outcomes often hinging on policy language and timing. In one case, a demand letter was ruled to be a claim made prior to the policy period and thus ineligible for coverage.

The report also reviewed court decisions involving policy exclusions, insured capacity disputes, and the advancement of defense costs. In general, courts reinforced the expectation that insurers must advance costs while coverage questions are pending and emphasized that exclusions—particularly those tied to capacity or restitution—should be interpreted narrowly and in light of the full policy.