United Kingdom (UK) SME Insurance Distribution Dynamics by Channels and Future Market, 2023 Update

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United Kingdom (UK) SME Insurance Distribution Market Report Overview

The number of private businesses in the UK increased by 0.8% to reach a value of 5.6 million, in 2023, despite the economic challenges in recent years. This report looks at how SMEs in the UK are buying a range of commercial insurance products and the reasons behind their purchasing decisions. It examines the channels used by SMEs when purchasing insurance, pre-purchase activities, switching behavior, and the factors most important to SMEs when selecting or switching providers.

Key Distribution Channel ·        Brokers

·        Direct Channels

·        Banks

·        PCW

Key Factors for Provider Selection and Customer Retention ·        Cost of Policy/Price

·        Reputation of Provider

·        Transparency of Pricing

·        Established and Known Brand Name

·        Previous Relationship with Company

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UK SME Insurance Distribution Market Critical Success Factors:

  • Integrate digital or AI tools to improve customer satisfaction rates: Larger SMEs are particularly interested in making use of AI tools to assess their insurance needs and recommend coverage options. Integrating new, sophisticated technology can help reduce costs in the long run, as well as improve customer service with more accurate risk profiling and faster onboarding.
  • Maintain strong partnerships with brokers and banks: Banks play a far more significant role in the distribution of commercial insurance than personal lines products. In 2023, banks accounted for 19.9% of SME insurance distribution, with this figure increasing to 23.4% of medium companies. Maintaining strong partnerships with both banks and brokers will maximize an insurer’s chances of getting their products in front of new customers.

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UK SME Insurance Distribution Market Segmentation by Channels

Brokers is the most important distribution channel in the SME insurance distribution market

The key channels in the UK SME insurance distribution market are brokers, direct channels, banks, and PCW. The broker channel remained the most popular among SMEs in 2023. Brokers is the key channel for distribution of commercial policies (especially as company size increases) due to their ability to provide advice, offer risk management services, and tailor product offerings for clients.

UK SME Insurance Distribution Market Analysis by Channels, 2023 (%)

UK SME Insurance Distribution Market Analysis by Channels, 2023 (%)

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UK SME Insurance Distribution Market Segmentation by Factors for Provider Selection

Price was the key factor for Provider Selection in 2023

The key factors taken into consideration for provider selection in the UK SME insurance are the cost of policy/price, the reputation of the provider, transparency of pricing, and established and known brand name among others. In 2023, price remained a key factor for customers to choose a provider. For SMEs of all sizes, the cost of a policy is the most important factor when selecting a provider.

UK SME Insurance Distribution Market Analysis by Factors of Provider Selection, 2023 (%)

UK SME Insurance Distribution Market Analysis by Factors of Provider Selection, 2023 (%)

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UK SME Insurance Distribution Market - Latest Developments

  • Tax cuts and rate freezes were announced in the November 2023 Autumn Statement, which will alleviate some of the cost-of-living burden for many businesses in 2024.

Segments Covered in the Report

UK SME Insurance Distribution Channels Outlook

  • Brokers
  • Direct Channels
  • Banks
  • PCW

UK SME Insurance Provider Selection Factors Outlook

  • Cost of Policy/Price
  • Reputation of Provider
  • Transparency of Pricing
  • Established and Known Brand Name
  • Previous Relationship with Company


• Brokers remain the key distribution channel for SME insurance in 2023, accounting for 43.7% of the market. However, this figure is the lowest of the past five years. Many SMEs have made greater use of PCWs in search of better deals amid the cost-of-living crisis.

• Price is the most important factor for SMEs of all sizes when choosing a provider. Over a third of sole traders say price is the most important factor to them.

• Companies are more likely to consider making changes to their policy (either cancel or switch provider) as their size increases. Medium enterprises pay the highest premiums and are therefore keenest to seek better value or cancel policies that are not bringing the best possible value to the company.

Reasons to Buy

  • Determine the purchasing channels and methods used by SMEs of all sizes in 2023.
  • Understand critical factors for SMEs to select an insurance provider.
  • Improve customer retention by identifying key reasons for SMEs to change providers for various products.
  • Ascertain the effect of cost-of-living crisis on SMEs’ decision to switch or cancel their policies.
  • Analyze the promptness of SMEs to use AI to improve their customer experience in the purchasing journey.

Table of Contents

Executive Summary

Critical Success Factors

The UK SME Landscape

Purchasing Channels

Provider Selection and Customer Retention

Future Switching and Cancellations

Openness to AI


Frequently asked questions

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