United Kingdom (UK) SME Insurance Market Dynamics, Challenges, Growth Opportunities and Forecast, 2022-2026

Table of Contents

1. Executive Summary
1.1 Claims inflation has led to steady 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 growth has been sluggish since Q1 2022
2.5 The cost-of-living crisis is a huge concern for SMEs

3. The UK SME Insurance Market
3.1 The SME insurance market registered steady growth in 2021
3.2 Packaged insurance plans are common, especially among small- and medium-sized businesses
3.3 COVID-19 cancellations have fallen as SMEs return towards normalcy
3.4 Employers’ liability take-up increased in 2022, although it remains low given that the product is a legal requirement
3.5 Insurers should offer usage-based policies to help SMEs maintain their cover
3.6 Penetration rates fluctuate across lines, but on the whole key products have increased
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 GBP12.1 billion by 2026f

5. Appendix
5.1 Abbreviations and acronyms
5.2 Definitions
5.3 Methodology
5.4 Secondary sources
5.5 Further reading

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List of Tables
Table 1: The number of SMEs in the UK private sector by business size, 2011-22
Table 2: UK private enterprise volume, employment, employees, and turnover by business size as of the start of 2022
Table 3: The number of company registrations in the UK (000s), 2016-23
Table 4: Policy cancellations because of COVID-19 by products and SME size, 2022
Table 5: Product uptake among UK SMEs, 2018-22

List of Figures
Figure 1: Most UK private enterprises are SMEs, but they only account for just over half of turnover
Figure 2: Company liquidations rose again in 2022
Figure 3: Three of the 16 industries account for more than half of SME revenue
Figure 4: Over three quarters of SMEs are concerned about the cost-of-living crisis
Figure 5: Only one in five employees anticipate being in the office for more than three days a week
Figure 6: Since the COVID-19 pandemic began, the UK's GDP has experienced significant fluctuations
Figure 7: In April 2020, the number of people receiving Universal Credit significantly increased
Figure 8: The UK unemployment rate continued to fall in 2022
Figure 9: Since the beginning of the COVID-19 pandemic, total and real earnings have fluctuated
Figure 10: SMEs are concerned about being financially affected by market and economic conditions
Figure 11: Over three quarters of businesses in the IT and business services sector are concerned about generating enough revenue to stay afloat
Figure 12: Over two thirds of the transport, storage, and communication sector are concerned about a situation that would prevent them from trading
Figure 13: The SME insurance market experienced steady growth in 2021
Figure 14: Cyber, property, and business interruption insurance all saw premiums rise at renewal in 2022
Figure 15: Since the COVID-19 pandemic, major commercial insurance lines have experienced fluctuations
Figure 16: In 2022, around 70% of small- and medium-sized businesses purchased packaged insurance
Figure 17: The biggest proportion of cancellations resulting from COVID-19 were seen in commercial motor products in 2022
Figure 18: Some SMEs are not aware employers' liability is a legal requirement
Figure 19: A fifth of SMEs that do not have usage-based insurance are receptive to the idea
Figure 20: Around three quarters of SMEs would be interested in usage-based car insurance if it reduced their premiums
Figure 21: SMEs view cheaper premiums and improved safety measures as the most important features of usage-based car insurance
Figure 22: Insurers have experienced varying degrees of success with product penetration
Figure 23: Penetration rates rise in line with company size
Figure 24: SME market GWP is set to reach GBP12.1 billion by 2026f
Figure 25: 2022 saw a significant rise in the number of remote workers among SMEs
Figure 26: SMEs are aware that the COVID-19 pandemic increased their cyber risk
Figure 27: SMEs are more likely to buy cyber insurance following the impact of the COVID-19 pandemic
Figure 28: Larger SMEs are more willing to pay for pandemic insurance
Figure 29: Larger SMEs are prepared to spend more on pandemic insurance
Figure 30: Forecasting methodology

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