Although it’s only just begun, 2026 is already shaping up to be a pivotal year for IPOs. For leadership teams, ensuring robust D&O insurance coverage isn’t optional; it’s essential. Here’s what you need to know if you’re planning to ring the bell in 2026.
A big year ahead
2025 was, by many measures, a bounce-back year for capital markets activity, including IPOs. In 2025, 202 IPOs were completed in the U.S. (opens a new window), according to Renaissance Capital. That’s well below the 397 IPOs seen in 2021, but significantly more than the annual average of 110 new listings from 2022 through 2024.
“The SPAC market ramped up its recovery in 2025, with new issuance more than doubling from 2024, a positive sign for the IPO alternative amid dwindling merger activity,” Renaissance Capital said. “With a volatile year in the rearview and more stable ground underfoot, we’re optimistic that the IPO market will resume its long-awaited pickup in 2026.”
“Traditional IPOs raised $33.6 billion in 2025 [through Nov. 30], their best year since 2021,” PwC said in its own 2026 capital markets outlook (opens a new window). Following the government shutdown — which effectively froze the IPO pipeline at the Securities and Exchange Commission (SEC) — “many issuers considering an offering shifted their plans into 2026, which is expected to meaningfully increase activity—particularly in the first half of the year.”
More deals are expected for the year ahead. “US public markets are set for another big year in 2026, driven by moderating inflation, anticipated interest rate cuts, and a significantly expanded backlog of IPO-ready companies,” PwC said. “After three years of intermittent issuance windows, hundreds of late-stage private companies—including more than 800 unicorns—enter 2026 with stronger balance sheets, improved operating discipline, and clearer paths to profitability.”
New investors, new risks
IPOs do not happen overnight. They are often the result of months or even years of planning on several fronts. Any organization endeavoring to complete an IPO in 2026 should already be deep into planning — and insurance and risk management must not be ignored during that detailed process.
From kickoff to listing, the IPO process typically takes five to six months, with planning beginning 18 to 24 months in advance of kickoff to avoid stress and delays. Critical tasks companies must address during this process include:
Drafting registration statements, including an SEC form S-1.
Preparing audited financial statements.
Allowing for financial underwriters to complete due diligence.
In addition to the above steps, which are typically completed with advice and guidance from both in-house and outside counsel, prospective public companies should also work with their insurance brokers to lay the ground for changes to their existing insurance programs. In the best case, insurance planning begins 18 to 24 months ahead of a listing date. However, private companies more often begin the insurance process closer to six to nine months out, which typically still allows sufficient time to transition directors and officers liability (D&O) insurance policies.
Regardless of when it begins, this process is crucial, as a company shifting from a private entity to a publicly traded one means taking on several new risks. Notably, public companies are exposed to class-action lawsuits filed by shareholders under SEC rules. Shareholders could allege fraud, mismanagement, or breaches of fiduciary duty by companies and their senior executives in the performance of their duties — for example, making false or misleading statements or misrepresenting the impact of industry and economic trends, leading to a drop in a company’s stock price.
Investors could also file derivative suits against individual directors and officers. These suits, which may allege breaches of fiduciary duty or mismanagement, are filed on behalf of the corporate entity, and — if successful — typically result in changes to company policy and/or new governance frameworks in addition to financial damages.
Along with civil litigation, public companies are subject to SEC enforcement actions. These can result in fines and penalties against businesses and individuals, as well as orders to cease certain conduct that the SEC deems harmful to investors.
Beyond the long-term risks companies may face once becoming public, the IPO process itself is risky. Among other concerns, there are risks related to:
Regulatory disclosures. Companies preparing for IPOs must ensure accuracy and completeness in their registration statements while complying with stringent requirements under the Sarbanes-Oxley Act of 2002.
Valuation pressures. Mispricing shares — whether too high or too low — can trigger shareholder dissatisfaction and regulatory scrutiny, damaging market confidence.
Board structure. Securities exchanges impose strict governance standards. For instance, the New York Stock Exchange mandates that a majority of directors, along with all members of audit, compensation, and governance committees, must be independent.
Optimizing your D&O coverage
Your private company D&O insurance policy may serve you well given your existing risk profile. As you become a public company, you’ll need a new policy.
Risk professionals, corporate officers and board members should work with their insurance brokers to build a policy designed to meet the needs of a public company, with particular attention to limits and retentions, which will likely no longer be sufficient or available under private company policies. They should work to ensure terms and conditions are optimal under Side A of the new policy, which is the policy section that provides direct coverage — also referred to as personal asset protection — to company directors and officers.
During this process, it’s vital that companies work with knowledgeable and capable insurance brokers. Among other things, your broker should offer:
Deep experience with IPOs and public company D&O insurance and an understanding of the major risks public companies face.
Claims advocacy and a strong track record. Specifically, look for a broker with experience handling complex situations like litigation, restructuring, or bankruptcy.
Carrier relationships. Your broker should partner you with insurers that have strong claims-paying reputations and financial stability.
Data and analytics capabilities. A good broker should provide robust benchmarking and data analytics to justify recommended coverage limits and program structure.
Through the process of going public, brokers should keep all key stakeholders— board members, executives, and outside counsel — involved and aligned on risk tolerance, cost expectations, and program design. And beyond placing coverage, brokers should advise on market dynamics, policy language, and trade-offs between premium, retention, and coverage scope.
For more information, watch episode 2 (opens a new window)of our Leading on Risk video series, visit our IPO insurance page (opens a new window), or contact a member of your Lockton Professional & Executive Risk team.
