United Kingdom (UK) SME Insurance - Market Dynamics and Opportunities 2021
Summary
The UK SME market generated approximately GBP0.9 billion in gross written premiums (GWP) in 2020, growing significantly by 13.8%. Premiums hardened considerably in 2020 and 2021, which was the sole reason for such strong premium growth. Insurers were unable to grow the volume of policies, as SME numbers declined and penetration rates fell across most product lines. Although SME numbers rose in 2020, a notable proportion were using the furlough scheme and were therefore unlikely to renew policies.
This report looks at the state of the UK’s SME insurance market. It sizes the market in 2021 and forecasts future gross written premiums until 2025. It analyzes the macroeconomic factors that influence the space. The report also uses our UK SME Insurance Survey data to analyze SMEs’ attitudes to insurance and the key factors impacting the market in 2021 and beyond.
Scope
- The number of SMEs in the UK declined by 6.5% in 2021.
- Loss of business due to coronavirus remains SMEs’ biggest concern, with 36.2% either very or extremely concerned.
- Key products such as public and employers’ liability saw penetration rates drop considerably from 2019 to 2021 due to the COVID-19 pandemic.
- Learn about the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy
- Identify the effects of COVID-19 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 space
- Executive Summary
- Claims inflation has led to strong premium growth
- Key findings
- Critical success factors
- The Shape of the UK SME Market
- Introduction
- SMEs account for the vast majority of UK businesses
- Table The number of SMEs in the UK private sector by business size, 2011-21
- Table UK private enterprise volume, employment, employees, and turnover by business size, start of 2021
- Table Figure 1: UK SMEs account for the majority of private businesses but just over half of total turnover
- Table The number of company registrations in the UK (000s), 2015-21
- Table Figure 2: Company liquidations have fluctuated since the start of the pandemic
- Table Figure 3: More than half of SME turnover is generated by three of 16 industries
- Macroeconomic impact on the SME market
- Table Figure 4: Less than one in five individuals anticipate being in the office for more than three days a week
- UK GDP rose in Q2 2021 after a sharp drop at the start of 2020
- Table Figure 5: UK GDP has fluctuated heavily since the start of the pandemic
- Table Figure 6: The number of people on Universal Credit substantially increased in April 2020
- Table Figure 7: The UK unemployment rate dropped slightly at the start of 2021
- Table Figure 8: Average pay has fluctuated since the start of the COVID-19 pandemic
- The impact of COVID-19 remains a huge concern for SMEs
- Table Figure 9: COVID-19 remains SMEs' greatest concern
- Table Figure 10: Nearly two thirds of the retail and wholesale industry worry about generating enough revenue
- Table Figure 11: Nearly two thirds of the wholesale and retail industry are worried about an event preventing them from trading
- The UK SME Insurance Market
- The SME insurance market registered strong growth in 2020
- Table Figure 12: The SME insurance market saw sharp growth in 2020
- Table Figure 13: Key commercial insurance lines have seen fluctuations since the pandemic
- Packaged insurance policies are popular, particularly among small and medium businesses
- COVID-19 continues to cause SMEs to cancel policies
- Table Figure 14: Over 70% of small and medium businesses bought packaged insurance in 2021
- Table Figure 15: Commercial motor products saw the highest levels of COVID-19-related cancellations in 2021
- Table Policy cancellations because of COVID-19 by products and SME size, 2021
- Employers' liability take-up dropped despite being a legal requirement
- Table Figure 16: Some SMEs are willing to take the risk of not having employers' liability in place
- Business interruption court cases did not notably hurt SMEs' trust in insurers
- Table Figure 17: Insurers only lost a small amount of trust over business interruption court cases
- Insurers should utilize usage-based policies to help SMEs retain policies during COVID-19
- Table Figure 18: Nearly a fifth of SMEs that do not have usage-based insurance are open to the concept
- Penetration rates fluctuate across lines, but key products have seen dips
- Table Figure 19: Insurers have seen mixed fortunes in terms of penetration across products amid COVID-19
- Table Product uptake among UK SMEs, 2018-21
- Larger SMEs are more likely to hold every type of insurance
- Table Figure 20: Penetration rates increase as businesses get larger
- The SME insurance market registered strong growth in 2020
- The Future of the UK SME Insurance Market
- SME GWP is set to rise steadily to GBP12.1 billion by 2025
- Table Figure 21: SME market GWP is set to reach GBP12.2 billion by 2025
- Table The proportion of SMEs thinking about canceling a given product, 2021
- Table Figure 22: SMEs saw another substantial increase in employees working remotely in 2021
- Table Figure 23: SMEs are aware they face increased cyber risk because of COVID-19
- Table Figure 24: SMEs are more likely to purchase cyber insurance because of COVID-19
- Table Figure 25: The majority of small and medium businesses either already have pandemic insurance or are willing to pay for it
- Table Figure 26: Larger SMEs are more willing to pay for pandemic insurance another year into COVID-19
- Table Figure 27: Larger businesses are willing to pay more for pandemic insurance
- SME GWP is set to rise steadily to GBP12.1 billion by 2025
- Appendix
- Abbreviations and acronyms
- Definitions
- Methodology
- Table Figure 28: Forecasting methodology
- Secondary sources
- Further reading
- About GlobalData
- Contact Us
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