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Increased filings and underwriter appetite mark IPO landscape

As the IPO market continues to gain momentum, private companies should consider that navigating today’s complex and evolving risk landscape requires proactive and tailored risk management strategies.

10/17/2025 · 3 minute read

After a few relatively quiet years, the initial public offering (IPO) market is showing signs of strong momentum and renewed optimism. Although the total number of companies going public this year is lower than originally expected, it remains notably higher than previous years.

Additionally, the pipeline of companies preparing to go public by mid-October has grown by more than a third  year-over-year.

More than 160 companies went public in the first nine months of 2025, surpassing the total of 150 for all of 2024.

Source: Renaissance Capital

IPO activity has steadily increased through the year, peaking in July with 26 IPOs in what the Wall Street Journal called “a red-hot summer for IPOs” amidst “the best IPO market in years.” Around 200 companies filed to go public in the first three quarters of 2025, compared to 214 for all of 2024. Close to US$31 billion in proceeds was raised up to September 30, higher than US$29.6 billion for all of 2024.

If the momentum continues, it is possible that IPO activity in the fall of 2025 and into 2026 could reach its highest levels since 2021, as tariff-induced volatility wanes and interest rate cuts are introduced. However, as recent years have shown, the political and legal landscape can be unpredictable, potentially influencing the strength of the IPO pipeline.

Market conditions driving increased underwriter interest

Many factors may influence a company’s decision to go public, but from an insurance perspective, the current market conditions are the most favorable in some time. Key drivers behind this positive environment include a continuing soft directors and officers liability (D&O) market, a scarcity of new public company opportunities, and equity markets that have continued to rise despite some volatility.

Since the 2002 passage of Sarbanes-Oxley — which aimed to enhance corporate transparency and accountability through stricter regulations for public companies — D&O carriers have sought to increase the number of public companies in their portfolio. However, while the number of D&O carriers has grown substantially, the pool of public companies has remained at reduced levels for over two decades.

This imbalance has resulted in more insurers competing for fewer opportunities and contributed to generally soft D&O market conditions. As a result of this limited supply relative to demand, underwriters are demonstrating a greater appetite to write IPOs than they have in recent years, particularly when the legal landscape was less favorable for insuring public offerings.

A shifting legal landscape

An IPO has traditionally been one of the riskiest events in a company’s history. The many disclosures and risk factors required in an S-1 filing ahead of an IPO provide numerous opportunities for plaintiff attorneys to identify potential misstatements. Under Section 11 of the 1933 Securities Exchange Act, companies face strict liability for any statements found to be false or misleading. This is a lower standard of proof than applied under Section 10(b)(5) of the 1934 Securities Exchange Act against companies, which covers false or misleading statements in subsequent securities filings, such quarterly 10-Q earnings reports.

Federal forum provisions rebalanced IPO insurance markets

Some plaintiffs’ attorneys brought IPO-related suits in state courts, often in plaintiff-friendly venues like California. This trend grew after 2010 and was reinforced in 2018 when the Supreme Court ruled in Cyan v. Beaver County that IPO securities lawsuits could proceed in state court, significantly increasing litigation risk for companies going public. In response, many insurers raised premiums and reduced capacity.

To mitigate this risk, many companies began adding federal forum provisions to their bylaws, requiring IPO-related lawsuits to be filed only in federal court. Courts upheld these provisions, normalizing the litigation landscape. The introduction of federal forum provisions in 2020 allowed insurers to regain confidence that IPO-related securities suits would be litigated in federal court, leading to greater underwriter appetite for IPOs.

Despite decline in number, SPACs continue to shape IPO market

While special purpose acquisition companies have existed for some time, 2021 saw a capital-raising phenomenon where the number of SPACs that filed to go public well exceeded previous years. While SPAC filings declined considerably after 2021, these companies are still responsible for a considerable amount of overall IPO activity.

Key factors driving improved IPO insurance conditions

Recent years have brought a unique combination of factors that contributed to a favorable insurance market for IPOs. These include a depressed D&O market with limited new opportunities and a renewed certainty that IPO litigation will not be handled in state courts. These factors have contributed to a favorable insurance environment for IPOs, including:

  • Increased capacity. Insurers, who previously generally limited IPO risk coverage to US$5 million, now broadly offer US$10 million limits.
  • Pricing. IPO premiums have dropped significantly. While the average premium for a primarily D&O layer in 2021 stood at over US$200,000 per million, this has gone down to less than US$60,000 per million in 2025.
  • Coverage. A major enhancement this year was the introduction of underwriter coverage that can be added as a specialized enhancement to a traditional D&O policy. This insuring agreement replaces the company’s indemnity to the underwriter at rates that are typically attractive for the insured.

Navigating an evolving risk landscape through tailored insurance programs

As the IPO market continues to gain momentum, private companies should consider that navigating today’s complex and evolving risk landscape requires proactive and tailored risk management strategies, including a robust insurance program that is adapted to their evolving needs.

The specialists within Marsh’s FINPRO Practice have the deep market expertise and experience to help organizations optimize their coverage to protect their leadership teams and their bottom line.

For more information, contact your Marsh representative.

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