United Kingdom (UK) SME Insurance Market Size, Trends, Competitor Dynamics and Opportunities

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United Kingdom (UK) SME Insurance Market Report Overview

The UK SME insurance market generated gross written premiums (GWP) worth GBP15.52 billion in 2023. The primary factor contributing to GWP growth in 2023 was a large year-round hardening of premiums. The rise in claims expenses, which were often passed on to customers, also contributed to the overall increase in GWP. Various insurance categories witnessed substantial increases in the cost of coverage, primarily due to inflationary pressures and challenges in the global supply chain. However, insurers responded by adjusting premiums to account for these elevated costs. The GWP in the UK SME insurance market will grow at a CAGR of more than 4% from 2022 to 2027.

UK SME Insurance Market Outlook 2022-2027 (GBP Billion)

UK SME Insurance Market Outlook 2022-2027 (GBP Billion)

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The UK SME insurance market research report offers insights into the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy. The report enables clients to identify the effects of the cost-of-living crisis on the UK SME insurance space. Furthermore, the UK SME insurance report outlook presents growth opportunities in the SME space as well as challenges faced by SMEs.

Market Size (2023) GBP15.52 billion
CAGR (2022-2027) >4%
Key Concerns ·        Cost-of-living Crisis

·        Incoming/Possible Recession

·        High Interest/Borrowing Costs

·        Increase in Business Rates

·        Cyber Crime

Key SMEs by Size ·        Medium

·        Small

·        Micro

·        Sole Trader

Key Insurance Products ·        Employers’ Liability Insurance

·        Public Liability Insurance

·        Professional Indemnity Insurance

·        Property Insurance

·        Cyber Insurance

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UK SME Insurance Market Segmentation by Key Concerns

Cost-of-living crisis, incoming/possible recession, high interest/borrowing costs, increase in business rates, and cyber crime are a few of the key reasons for concern among SME insurers. In 2023, the cost-of-living crisis was the topmost concern raised by the SMEs. This heightened level of concern reflects the significant impact of the cost-of-living crisis on the business environment. The seriousness of this concern corresponds with the widespread challenges businesses encounter, encompassing rising operational costs and potential effects on consumer spending.

UK SME Insurance Market Analysis by Key Concerns, 2023 (%)

UK SME Insurance Market Analysis by Key Concerns, 2023 (%)

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UK SME Insurance Market Segmentation by SME Size

The UK SME insurance product landscape comprises a significant component, namely, packaged insurance plans. These are plans wherein several insurance policies are purchased from the same insurer or broker. The key SMEs are classified by size into medium, small, micro, and sole trader. In 2023, medium-sized enterprises was the leading SME size that purchased insurance via a package. Bundled insurance packages offer a streamlined and simplified solution for businesses, consolidating multiple policies under a single umbrella.

UK SME Insurance Market Analysis by SME Size, 2023 (%)

UK SME Insurance Market Analysis by SME Size, 2023 (%)

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UK SME Insurance Market Segmentation by Products

The key products in the UK SME insurance market are employers’ liability insurance, public liability insurance, professional indemnity insurance, property insurance, and cyber insurance among others. In 2023, employers’ liability insurance saw the biggest growth. As business operations resumed and employees returned to workplaces, companies likely recognized the heightened importance of ensuring comprehensive coverage for workplace-related risks.

UK SME Insurance Market Analysis by Products, 2023 (%)

UK SME Insurance Market Analysis by Products, 2023 (%)

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Key Segments Covered in this Report

UK SME Insurance Concern Outlook, (%, 2023)

  • Cost-of-living Crisis
  • Incoming/Possible Recession
  • High Interest/Borrowing Costs
  • Increase in Business Rates
  • Cyber Crime

UK SME Insurance SME Size Outlook (%, 2023)

  • Medium
  • Small
  • Micro
  • Sole Trader

UK SME Insurance Product Outlook (%, 2023)

  • Employers’ Liability Insurance
  • Public Liability Insurance
  • Professional Indemnity Insurance
  • Property Insurance
  • Cyber Insurance

Scope

• The number of SMEs in the UK increased by 0.8% in 2023, rising from 5,501,260 to 5,547,170.

• The cost-of-living crisis is SMEs’ biggest concern, with 81.8% of SMEs concerned to some degree.

• The SME insurance market is set to be worth GBP15.52 billion in 2023e, up 11.2% on 2022.

• GlobalData forecasts the SME insurance market to reach GBP17.32 billion in 2027, recording a compound annual growth rate (CAGR) of 4.4% over 2022–27.

Key Highlights

  • Learn about the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy.
  • Identify the effects of the cost-of-living crisis on the UK SME insurance space.
  • Discover GlobalData’s forecasts for the market.
  • Recognize the challenges faced by UK SMEs.
  • Identify growth opportunities in the SME market.

Reasons to Buy

• Learn about the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy.

• Identify the effects of the cost-of-living crisis on the UK SME insurance space, as well as other challenges faced by SMEs.

• Discover GlobalData’s forecasts for the SME insurance market.

• Identify growth opportunities in the SME space.

Gallagher
Society of Motor Manufacturers and Traders
Department for Work and Pensions
Acturis
JUMPSEC

Table of Contents

  • 1 Executive Summary

    • 1.1 Claims inflation has led to strong premium growth
    • 1.2 Key findings
    • 1.3 Critical success factors

  • 2 The Shape of the UK SME Market

    • 2.1 Introduction
    • 2.2 SMEs account for the vast majority of UK businesses
    • 2.3 Macroeconomic impact on the SME market
    • 2.4 UK GDP has fluctuated since the COVID-19 pandemic
    • 2.5 SMEs’ top concern in 2023 is the cost-of-living crisis

  • 3 The UK SME Insurance Market

    • 3.1 The SME insurance market registered growth of

      7.2% in 2022, and is set to have grown further in 2023e

    • 3.2 SMEs are increasingly purchasing insurance via packages
    • 3.3 Private medical insurance has witnessed the highest cancellation rate due to the cost-of-living crisis
    • 3.4 Insurers should educate SMEs on the importance of employers’ liability insurance
    • 3.5 Usage-based policies can benefit SMEs
    • 3.6 Penetration rates vary across different lines of products
    • 3.7 Larger SMEs are more likely to have most types of insurance

  • 4 The Future of the UK SME Insurance Market

    • 4.1 SME GWP is set to rise steadily to GBP17.32 billion by 2027

  • 5 Appendix

    • 5.1 Abbreviations, acronyms, and initialisms
    • 5.2 Definitions
    • 5.3 Methodology
    • 5.4 Secondary sources
    • 5.5 Further reading

Table

Table 1: The number of SMEs in the UK private sector by business size, 2014–23

Table 2: UK private enterprise volume, employment, employees, and turnover by business size as of the start of 2023

Table 3: The number of company registrations in the UK (000s), 2016–23

Table 4: Policy cancellations due to the cost-of-living crisis by products and SME size, 2023

Table 5: Product uptake among UK SMEs, 2019–23

Figures

Figure 1: The vast majority of UK private enterprises are micro-sized firms, but they only account for around one fifth of turnover

Figure 2: In Q2 2023, quarterly company insolvencies reached over 6,300 for the first time since 2009

Figure 3: Wholesalers and retailers account for a third of all SME turnover in 2023

Figure 4: The cost-of-living crisis remains a concern for the majority of SMEs

Figure 5: The UK’s GDP increased by 1.4% in Q3 2023

Figure 6: The number of people receiving Universal Credit is rising, albeit at a slow pace

Figure 7: The UK’s unemployment rate began to rise in 2023

Figure 8: The annual growth rate for weekly earnings returned to positive territory in 2023

Figure 9: The cost-of-living crisis remains the top concern for SMEs

Figure 10: Over 80% of businesses in the health and social sector are concerned about the cost-of-living crisis

Figure 11: Over three quarters of non-profit SMEs are concerned about generating enough revenue to keep their business going

Figure 12: The SME insurance market experienced growth in 2022, and is expected to increase further in 2023

Figure 13: Renewals saw increased premiums for cyber, property, and business interruption insurance in 2023

Figure 14: Insurance rates increased year on year in Q1 2023, with property the key driver

Figure 15: Over 80% of medium-sized enterprises purchase insurance via a package

Figure 16: The largest proportion of cancellations due to the cost-of-living crisis were seen in private medical insurance

Figure 17: Some SMEs are not aware employers’ liability insurance is a legal requirement

Figure 18: Over half of SMEs do not have a usage-based insurance policy

Figure 19: Among SMEs without usage-based commercial vehicle insurance, around three quarters would be interested in such policies if they reduced their premiums

Figure 20: SMEs rank improved safety measures as the most important feature of usage-based car insurance

Figure 21: Insurers have experienced varying degrees of success in terms of product penetration

Figure 22: There is a positive correlation between size of business and insurance penetration rates

Figure 23: SME insurance GWP is set to reach GBP17.32 billion in 2027

Figure 24: Over half of SMEs would consider using an insurance app

Figure 25: Smaller firms exhibit a lower level of comfort when it comes to AI assessing their insurance requirements

Figure 26: SMEs believe AI can evaluate their insurance needs and suggest the best coverage options more efficiently than humans

Figure 27: Sole traders place high value on human expertise and advice

Figure 28: Larger SMEs are more comfortable with AI-powered chatbots for insurance enquiries

Figure 29: Larger businesses are more likely to switch to an EV sooner

Figure 30: Two fifths of medium-sized businesses rank an insurer’s sustainability record as very important

Figure 31: Forecasting methodology

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