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What SPAC Teams Want to Know in 2025: Top 5 Questions
Yelena Dunaevsky
Sep 30, 2025
The SPAC market is showing renewed momentum. With regulatory headwinds easing, and investor interest in SPACs picking up speed, SPAC teams are seizing the opportunity to launch new SPAC IPOs and close interesting de-SPAC transactions.
But every year in SPAC-land brings new challenges, and 2025 is no different. For this article, I compiled the top five SPAC insurance and risk questions teams are currently asking, along with a few answers that should be informative and helpful to teams who are navigating the current market.
What Is the Status of SPAC D&O Insurance Premiums Right Now?
The traditional IPO market is still slow, which is causing the D&O insurance market to remain highly competitive, with insurers aggressively competing for public company D&O insurance premium dollars. This competition is spilling over into the SPAC market, where many, albeit not all D&O carriers are offering options for SPAC-related coverage. Consequently, SPAC teams are benefiting from favorable pricing and broader coverage terms, in direct contrast to what many seasoned sponsors saw in 2020 and 2021. The bottom line is that lower premiums are allowing teams to secure robust coverage at a fraction of what it would have cost during the peak of SPAC activity in 2021. This reduced D&O insurance pricing significantly lowers the costs of “at-risk capital” that teams need to secure in order to stand up a new SPAC.
The bad news is that this insurance environment is unlikely to last much longer—insurance markets have historically been cyclical, and carrier appetites can shift quickly. Many carriers are still dealing with limit loss payouts on some of the policies they wrote for the 2020–2021 SPAC cohort, preventing them from re-entering the SPAC market. They are waiting for an opportunity to charge higher premiums and that opportunity will not present itself until traditional IPOs start to pick up and the general demand for D&O insurance coverage increases. At current market conditions, we will likely see D&O insurance premiums start to increase in 2026. So, if you are heading into a SPAC IPO before the end of the year, now is the time to discuss insurance coverage with your SPAC insurance broker.
Aside from Premium Costs, What Else Should I Be Thinking About as My Team Heads into a SPAC IPO?
Premiums are just one piece of the puzzle. Several strategic decisions will impact the success of your insurance placement, your broader risk profile, and your claim outcome.
- Start early. Timing matters. Begin the insurance process well before your SPAC IPO (ideally two to three months out) to avoid last-minute surprises and ensure access to the best terms.
- Choose one retail broker, not a wholesaler. First, multiple brokers shopping your deal will signal disorganization to carriers. You’ll lose access to competitive quotes and will not be viewed as a serious player, which will translate into higher premiums and less favorable terms. Second, if your broker does not have personal connections with underwriters at the right SPAC-focused carriers, they will be working with a wholesale broker. Working through a wholesaler introduces an additional middleman, which means that when you file a claim, you won’t get the benefit of your broker’s direct connection to the underwriters who can help resolve the claim and get it paid quickly.
- Pick a SPAC specialist. SPAC insurance is not the same as D&O insurance for an operating private or public company, or even D&O insurance for a traditional IPO. It is a niche product with unique risks and structures. An insurance broker who specializes in SPACs will know which carriers are active in this niche and offer the best terms, what terms are market, which insurance structures are appropriate, and how to position your deal to maximize coverage and minimize cost.
- Understand your structure. You’ll need to decide whether a Side A Only, ABC, or a hybrid structure is right for your SPAC. This decision impacts pricing, coverage scope, and claims handling. A knowledgeable broker will be able to guide you through all the pros and cons based on your team’s goals, investor expectations, and market norms.
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What Is the Current Risk Level of SPAC-Related Litigation and Regulatory Enforcement?
The risk remains low for SPAC IPOs and is trending lower this year for de-SPAC transactions. De-SPAC-related securities class action litigation is down considerably from its peak in the 2022–2023 season. Furthermore, the Securities and Exchange Commission’s (SEC) posture has shifted under the current administration, and we’re seeing a decline in anti-SPAC sentiment and enforcement activity.
That said, litigation risk is never zero. Shareholder suits, regulatory inquiries, and post-merger disputes can and do happen, and on average, happen more frequently to companies that have gone public via a SPAC than to mature public companies or companies that went public via a traditional IPO.
However, as the market matures and deal quality improves, litigation risk is becoming more predictable and manageable. Working with a broker who understands the nuances of SPAC and de-SPAC risk leads to better insurance program structuring, more effective coverage, and reduced premium costs.
Crypto-Treasury Strategies Are Popular Now. Are There More Risks or Costs If My SPAC or Operating Company Goes in That Direction?
Yes, on both fronts.
- Insurance implications: Carriers view crypto-related strategies in general and crypto-treasury strategies in particular as higher risk. Some won’t quote coverage for them at all, while others will require higher premiums or impose restrictive terms. If your SPAC or operating company is considering holding or investing in crypto assets or pursuing a target with the purpose of engaging in crypto-related activities, expect increased scrutiny from insurance underwriters and higher insurance premiums.
- Litigation and regulatory risk: Crypto strategies carry elevated litigation and regulatory risk. Like any fast-moving trend, there are bound to be missteps in this developing area, especially as companies race to adopt new structures and strategies without fully understanding the regulatory framework or potential business risks around them. This can lead to shareholder suits, SEC investigations, and other costly legal challenges.
If you’re pursuing a crypto-treasury strategy, talk to your broker about increasing your coverage limits. Legal fees in these scenarios can escalate quickly, and a higher limit may be necessary to protect your directors and officers. You’ll also want to ensure that your policy includes coverage for regulatory investigations and defense costs. These new strategies are certainly interesting, innovative, and exciting, but they carry an increased level of risk. Make sure your insurance program reflects that reality.
How Do I Pick the Right Limit of Coverage for My SPAC and De-SPAC?
This is one of the most important questions in SPAC insurance, and also not an easy one to answer. First, you need to understand that you will be purchasing two separate policies: one for the SPAC IPO, which will bind at the time of the IPO, and then a separate one for the de-SPAC transaction, which will bind at the time of the business combination. Each has its own structure, market norms, and pricing dynamics. In addition, each aims to address different risk profiles. Let’s take each one at a time.
- SPAC IPO: A fairly clear market standard has developed for the limit of coverage necessary and adequate for a SPAC IPO. Compared to the standard limits in 2020 and 2021, current standard limits are relatively low and reflect the narrow risk exposure of a pre-merger SPAC. The limit selection is also driven by the amount of “at-risk capital” the SPAC team has access to, and, because that is a relatively low amount for most teams, they are not willing to seek high coverage limits. While there’s no need to choose a limit that is significantly higher than market norm, opting for a much lower limit results in a policy that will simply be unable to provide any meaningful protection to the directors and officers in the event of a claim.
- De-SPAC: For a de-SPAC, limit selection gets more complicated. The right limit depends on several factors, including, but not limited to:
- The operations of the target company
- The ultimate public float of the public company post-close
- The industry and jurisdiction of operations
- Historical litigation trends and lawsuit settlement data
This is where your broker’s expertise really matters. A seasoned SPAC insurance broker will be able to work through the limit analysis with you based not only on benchmarking data, but also on SPAC-related litigation information and trends, SPAC-related settlement history, regulatory history and enforcement actions relating to SPACs, sector- and industry-focused risk factors, and other factors that go into a well-thought-out limit selection process. They’ll help you strike the right balance between cost and protection and ensure that your coverage evolves as you transition from a SPAC or a private company to an operating public company.
Things to Consider
The SPAC market is energized and moving ahead quickly. With D&O insurance premiums at historic lows and regulatory pressure easing, now is a strategic time to launch or re-engage your SPAC plans. But success depends on picking the right advisors, including your insurance broker. The right SPAC broker will help you navigate complexity, avoid costly mistakes, and make decisions that protect your team, your investors, and the success of your future company. Ask them questions and let them answer those you didn’t even know you needed to ask.
Disclaimer: The information contained herein is offered as insurance Industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer financial, tax, legal or client-specific insurance or risk management advice. General insurance descriptions contained herein do not include complete Insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.
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