Companies going public in the United States face insurance costs that have incre...
- Companies going public in the United States face insurance costs that have increased as much as 200% in the last three years to cover their executives against lawsuits alleging they misled investors.
A $5 million policy that cost $200,000 in 2016 can now easily cost $500,000 to $600,000, said Paul Schiavone, head of North American Financial Lines for Allianz Global Corporate & Specialty, an Allianz SE unit. “Since then, the market has gotten absolutely more challenging,” said Jennifer Sharkey, President of the Northeast Management Liability Practice for insurance broker Arthur J. Gallagher & Co.
The changes come amid a spate of mega-IPOs, including recent offerings by ride-sharing rivals Uber Technologies Inc and Lyft Inc. There were 205 IPOs in 2018, up 14% from 2017, according to accounting and consulting firm EY. Shareholders slapped Lyft with a lawsuit about three weeks after its stock began trading on March 28 and quickly tanked more than 20%. The suit alleges that Lyft misled investors by overstating its market share. A Lyft spokeswoman declined to comment.
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