United Kingdom (UK) SME Insurance - Purchasing Journey in 2022
Summary
This report looks at how SMEs buy insurance coverage and the reasons behind their purchasing decisions. It examines the channels used by SMEs when purchasing insurance, pre-purchase activities, switching behavior, and whether SMEs are considering canceling any of their existing policies. The report uses results from our annual UK SME Insurance Survey, as well as additional in-depth interviews with industry leaders.
Brokers remain the most popular channel for SMEs when purchasing insurance, accounting for 47.0% of policies sold. After a decline in 2021. Direct sales retained their spot as the second most popular channel in 2022. However, this was a decline on a strong 2021, while banks regained some of their market share to take third place. Across all segments, online is the favored channel for purchases with 49.4% of policies bought online. Auto-renewals continued to decline in 2022, accounting for 26.8% of sales and highlighting that businesses are increasingly cost-conscious amid the tough economic environment. This means retention will be harder but also that there are greater opportunities for customer acquisition.
Scope
- An average of 67.7% of SMEs plan to stay with their current provider and coverage. However, this varies significantly according to the size of the company, with medium businesses most at risk of switching.
- Across the micro, small, and medium business segments, commercial vehicle policies are most likely to be under review. For example, 58.7% of medium businesses are considering making changes to single van policies. In the sole trader segment, companies are most likely to be assessing their business interruption cover, with 5.1% considering canceling it and 8.9% looking to switch provider.
- Understand trends in the UK SME insurance market.
- Learn how SMEs like to purchase insurance products and the factors influencing why they choose channels and methods.
- Identify how market trends and macroeconomic factors impact decision-making.
- Executive summary
- Critical success factors
- The UK SME Landscape
- SMEs account for 99.9% of all private businesses
- Purchasing Channels
- Overview
- Brokers are the most popular channel among SMEs
- Broker usage is strong across all sizes of SME
- Broker sales recovered among sole traders in 2022, while bank sales declined
- SMEs turn to brokers for more complicated products
- Broker sales to micro enterprises remain dominant, while direct sales dropped notably during 2022
- More than half of policies are sold through brokers for a number of products
- The bank channel recovered some lost ground among small businesses in 2022, while PCW usage declined
- Brokers consistently dominate across all products for small enterprises
- Banks’ share of the medium business segment was up in 2022 at the expense of direct sales
- Medium enterprises are more likely to use banks for insurance purposes than make direct purchases
- Around 50% of SMEs opt for online purchases across all segments
- In-person purchases are most popular among the oldest, mostestablished businesses
- Provider Selection and Customer Retention
- Overview
- Micro businesses are most likely to change insurer when it comes to policy renewal
- Sole traders are most likely to switch their single car policy
- Micro enterprises have high switching rates across all products
- Small businesses’ renewal behavior varies by product
- A higher proportion of medium enterprises that shop around end up switching
- Price is the primary driver for switching across all sizes of SME
- Price is the most important factor when selecting a provider, particularly for sole traders and micro businesses
- Larger SMEs are more concerned about an insurer’s record on sustainability
- Larger SMEs are more likely to undertake research before purchasing insurance
- Future Switching and Cancellations
- Overview
- Sole traders are most likely to be considering changes to business interruption cover
- Many micro businesses are considering changes to their policies
- Small businesses are more like to change their insurance cover than sole traders and micro enterprises
- Medium-sized businesses are most likely to switch provider in the future
- COVID-19 remains a key factor for SMEs considering switching providers or canceling policies
- Appendix
- Abbreviations, acronyms, and definitions
- Methodology
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