For companies eyeing the public markets, the best time to assess D&O risk is before the market is watching. (Image credit: Adobe Stock/ALM Media archives)

For companies preparing to go public, IPO readiness is as much about risk preparation as it is about financial statements, investor presentations and market timing.

A successful public listing requires companies to understand how their exposures will change once they enter the public markets and whether their insurance programs are built for that next stage.

That shift begins the moment a company enters the public markets. The organization is suddenly operating under a brighter spotlight, with greater scrutiny from investors, regulators, analysts, plaintiffs' attorneys and the broader market. That shift can create new pressures for management teams and boards, particularly when expectations around performance, disclosure and governance collide with the realities of operating as a newly public company.

For insurance professionals, risk managers and company leaders advising businesses on the path to an IPO, the takeaway is straightforward: Directors and Officers' liability insurance planning should be started well before the IPO is filed and not serve as a checked box at the end of the IPO process.

D&O insurance is designed to help protect directors and officers against claims related to their decisions and actions in their corporate roles. For private companies, those exposures may be meaningful, but they are often different from the risks that come with being public. Once a company lists, it may face shareholder claims, securities litigation, regulatory inquiries and heightened disclosure-related scrutiny. That makes D&O planning a core part of public-company preparation.

This is especially important as the IPO market shows signs of renewed momentum. A more active public listing environment could bring more companies into the D&O marketplace at a time when conditions have stabilized but remain highly dependent on company-specific risk.

The Baldwin Group's 2026 D&O Benchmarking Report found that the broader market has moved into a more balanced environment after several years of volatility. According to the report, 54% of companies saw premiums remain within plus or minus 10% year over year, while 30% experienced moderate decreases of 10% to 30%. Average total D&O limits also increased to $66 million.

Those figures suggest a market that is no longer softening at the same pace, but they should not be mistaken for a one-size-fits-all environment. Risk remains uneven across industries and company profiles. Healthcare and technology companies, for example, continue to see some of the highest premiums and retentions, reflecting their elevated exposure to securities litigation.

That matters for companies preparing to go public, particularly growth-stage businesses in sectors that already attract investor attention. An improving pricing environment may create an opportunity to reassess coverage, but it does not eliminate the need for discipline. Companies should be asking whether their D&O program reflects the risk profile they will carry after the IPO, not the one they had as a private company.

There are several areas that deserve attention early in the process:

  1. Companies should benchmark their proposed D&O program against relevant peers. That means looking beyond premium and evaluating limits, retentions, structure, coverage terms and conditions. Peer bench-marking can help identify whether a company is underinsured, overpaying or carrying a program that does not align with its size, industry, ownership structure or litigation exposure.
  2. Companies should pressure-test their limits. In a more favorable pricing environment, some organizations may be able to rebuild or adjust limits after the hard market cycle. However, the right limit is not simply the highest amount available or the lowest-cost option. It should reflect the company's market capitalization, industry, ownership base, governance profile and potential severity of claims.
  3. Companies should focus on retentions and program structure. Newly public companies will face different retention expectations than private companies, as insurers evaluate them based on financial performance, disclosure controls, management experience, growth trajectory and industry-specific risk. The structure of the program, including the balance between primary and excess layers, can significantly affect how coverage responds when a claim arises.
  4. Companies should prepare for underwriting analysis. Insurers will want to understand how the company approaches governance, risk oversight, disclosure practices, internal controls and board composition. A company that can clearly articulate its risk management story may be better positioned during the underwriting process.

A potential rebound in IPO activity could also influence broader D&O market dynamics. IPO and de-SPAC activity has historically played an important role in shaping D&O pricing and retention levels because newly public companies often carry elevated litigation risk. If public listings continue to recover, that could reintroduce demand into the market and create pricing pressure in certain segments, especially among growth-stage companies.

That does not mean every company preparing to go public will face the same conditions. It does mean that waiting until late in the IPO process can limit options. D&O insurance should be part of the broader readiness conversation alongside legal, financial, governance and investor relations planning.

For companies eyeing the public markets, the best time to assess D&O risk is before the market is watching. By bench-marking early, pressure-testing coverage, and aligning insurance programs with their post-IPO risk profile, companies can enter the public markets with greater confidence and a stronger foundation for the attention that comes next.

Mike Tomasulo is Senior Managing Partner and Management Liability National Practice Leader at The Baldwin Group. Opinions expressed here are the author's own. This article is published with permission an may not be reproduced.

(Featured image credit: Adobe Stock)

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