Fresh capacity has brought some stability to the market, but many directors and officers insurance buyers are still seeing rate increases and reduced limits, according to a report published Wednesday by Allianz Global Corporate & Specialty SE.

SPAC exposures are also growing, with losses already reported to be flowing through the D&O market, AGCS, a unit of Allianz SE, said in the report.

U.S.-listed companies, including initial public offerings, continue to see considerable rate pressure, as do pharmaceutical, technology, life science and retail businesses.

D&O capacity levels are still not at the soft market levels seen prior to 2018, even with the entry of new insurers in the market, according to the report.

“This means there is still an imbalance between supply and demand and many companies would like to purchase more limits than the industry can currently offer,” the report said.

Global insurance pricing for D&O previously saw double-digit increases in all key markets in 2021, according to third-party data included in the report.

Some deceleration in premium increases has been reported this year compared with 2020, though pricing varies by region.

Financial and professional lines rates increased 25% in the U.S., driven by D&O liability and cyber pricing, based on Marsh LLC’s global insurance market index for the second quarter of 2021.

Insurers are adapting coverage to provide adequate protection for sponsors, directors and shareholders in a SPAC deal, the report said.

While offering a more efficient route to public markets, SPACs carry a set of specific insurance-related risks.

“Depending on the type of insurance for each stage of their lifecycle, inherent exposures could potentially stem from mismanagement, fraud or intentional and material misrepresentation, inaccurate or inadequate financial information or violations of SEC rules or disclosure duties,” Lydia Miller, global underwriting and product analyst at AGCS, said in the report.

Failure to finalize the transaction within the two-year period, insider trading during the time a SPAC goes public and lack of adequate due diligence in the target company can also come into play, Ms. Miller said.

Post-merger, the risk of the go-forward company to perform as expected or failure to comply with the new duties of being a publicly listed company are among other emerging SPAC risks that should be considered.