(Reuters) – 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 rise in securities class-action cases involving initial public offerings is spurring IPO insurers to double and triple prices for directors and officers coverage, or “D&O” coverage, insurers and brokers told Reuters.

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.

“You want to be part of the market, but there are also lots of risks in IPOs,” said Schiavone. “If things don’t go well in a year, you have the investors saying, ‘I want my money back.’”

The tightening insurance market follows a 2018 U.S. Supreme Court decision that allows some securities lawsuits to proceed in state court in addition to federal court.

“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.

Investors who used to wait months to see how a new stock would perform now waste little time to see if promises made in offering documents come to fruition – and are swift to accuse the executives of misleading investors if they do not.

“You have a lot more aggressive lawyers and investors out there who are looking where the cash is,” said Jeff Lubitz, who heads Securities Class Action Services for Institutional Shareholder Services. “And now, it looks like they will have multiple choices on how to jump on this.”

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.

Many larger companies have ample funds to pay the premiums, but smaller companies that need the insurance in order to attract reputable board members may feel the strain, insurance brokers said.

There have been 25 lawsuits related to IPOs so far this year, against 19 companies. Six companies that launched IPOs face suits in both state and federal court, including Lyft, BrightView Holdings Inc, and US Xpress Enterprises.

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.

As the pace quickens and litigation picks up in two court systems, insurers are on the line to pay tens of millions of dollars in defense costs and substantial settlements.

IPO-related settlements have totaled $929 million since 2017, including a $250 million settlement by Alibaba Group Holding Ltd in April, after an earlier $75 million state court settlement. Last year, LendingClub Corp settled a suit for $125 million, according to ISS.

About 25 insurers sell D&O coverage to companies going public, including American International Group Inc, Chubb Ltd, AXA XL, Beazley PLC, and Allianz SE. The insurers, collectively, can offer about $150 million coverage, according to broker Aon Plc.

Insurers are chopping coverage limits and requiring IPO clients to pick up more costs before a policy kicks in. And they are requiring companies to pay a percentage of the eventual loss, said Rachel Turk, D&O team leader for Beazley.

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