As the number of special purpose acquisition companies (SPACs) has rapidly grown, so have SPAC-related litigation and investigations. On top of this, executives in this space face challenges finding sufficient coverage for the financial risks they face due to narrower coverages for SPACs than what is typically seen in director & officers (D&O) liability policies.

First, some background on SPACs, which are publicly listed shell companies that raise investor capital to acquire or merge with a privately-held company within two years and take that business public. A SPAC that does not acquire a target within that time period must liquidate and return the shareholders' investment. Additional investment may flow into the company at the time of the merger. The corporate transaction allows the target company to quickly gain access to the public shell company's cash and stock market listing and might be a more attractive option than a traditional initial public offering. SPAC growth has been phenomenal — 59 SPAC IPOs raised $13.9 billion in 2019, and the value of SPAC investments rose to $83.3 billion in 2020. While data for 2021 is still being collected, SPAC IPOs are estimated to have raised $100 billion by the end of May.