United Kingdom (UK) SME Insurance Market Dynamics, Challenges, Growth Opportunities and Forecast, 2022-2026
Summary
The UK SME market generated approximately GBP10.5 billion in gross written premiums (GWP) in 2021, growing by 4.5%. The primary factor contributing to GWP growth was a large year-round hardening of premiums. Many insurance lines experienced significant increases in the cost of repayments due to inflation and issues with the global supply chain, which led insurers to raise premiums. In particular, property and cyber insurance saw premium prices rise. Penetration rates across most product lines increased compared to 2020, allowing insurers to grow the volume of policies sold. This was despite the number of SMEs declining in 2021.
This report looks at the state of the UK SME insurance market. It sizes the market in 2022 and forecasts future GWP until 2026. It utilizes GlobalData’s annual UK SME Insurance Survey to analyze SMEs’ attitudes to insurance. The report also explores the key factors that will impact the market in 2022 and beyond.
Scope
- The number of SMEs in the UK declined by 1.5% in 2022.
- The cost-of-living crisis is SMEs’ biggest concern, with 51.9%% either ‘very concerned’ or ‘extremely concerned.’
- The SME insurance market is estimated to have been worth GBP10.9 billion in 2022, up 4.3% on 2021.
- Business interruption insurance penetration rates showed the biggest growth in 2022, rising by 5.9 percentage points (pp). This is likely due to the impact of the Russia/Ukraine conflict.
- 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.
- Executive Summary
- Claims inflation has led to steady premium growth
- Key findings
- Critical success factors
- The Shape of the UK SME Market
- Introduction
- SMEs account for the vast majority of UK businesses - In 2022, the number of SMEs fell for the second year in a row
- Table The number of SMEs in the UK private sector by business size, 2011–22
- Table UK private enterprise volume, employment, employees, and turnover by business size as of the start of 2022
- Table Figure 1: Most UK private enterprises are SMEs, but they only account for just over half of turnover
- Table The number of company registrations in the UK (000s), 2016–23
- Table Figure 2: Company liquidations rose again in 2022
- Table Figure 3: Three of the 16 industries account for more than half of SME revenue
- Macroeconomic impact on the SME market
- Table Figure 4: Over three quarters of SMEs are concerned about the cost-of-living crisis
- Table Figure 5: Only one in five employees anticipate being in the office for more than three days a week
- UK GDP growth has been sluggish since Q1 2022
- Table Figure 6: Since the COVID-19 pandemic began, the UK's GDP has experienced significant fluctuations
- Table Figure 7: In April 2020, the number of people receiving Universal Credit significantly increased
- Table Figure 8: The UK unemployment rate continued to fall in 2022
- Table Figure 9: Since the beginning of the COVID-19 pandemic, total and real earnings have fluctuated
- The cost-of-living crisis is a huge concern for SMEs
- Table Figure 10: SMEs are concerned about being financially affected by market and economic conditions
- Table Figure 11: Over three quarters of businesses in the IT and business services sector are concerned about generating
- Table Figure 12: Over two thirds of the transport, storage, and communication sector are concerned about a situation that
- The UK SME Insurance Market
- The SME insurance market registered steady growth in 2021
- Table Figure 13: The SME insurance market experienced steady growth in 2021
- Table Figure 14: Cyber, property, and business interruption insurance all saw premiums rise at renewal in 2022
- Table Figure 15: Since the COVID-19 pandemic, major commercial insurance lines have experienced fluctuations
- Packaged insurance plans are common, especially among small- and medium-sized businesses
- Table Figure 16: In 2022, around 70% of small- and medium-sized businesses purchased packaged insurance
- COVID-19 cancellations have fallen as SMEs return towards normalcy
- Table Figure 17: The biggest proportion of cancellations resulting from COVID-19 were seen in commercial motor products in 2022
- Table Policy cancellations because of COVID-19 by products and SME size, 2022
- Employers' liability take-up increased in 2022, although it remains low given that the product is a legal requirement
- Table Figure 18: Some SMEs are not aware employers' liability is a legal requirement
- Insurers should offer usage-based policies to help SMEs maintain their cover
- Table Figure 19: A fifth of SMEs that do not have usage-based insurance are receptive to the idea
- Table Figure 20: Around three quarters of SMEs would be interested in usage-based car insurance if it reduced their premiums
- Table Figure 21: SMEs view cheaper premiums and improved safety measures as the most important features of usagebased car insurance
- Penetration rates fluctuate across lines, but on the whole key products have increased
- Table Figure 22: Insurers have experienced varying degrees of success with product penetration
- Table Product uptake among UK SMEs, 2018–22
- Larger SMEs are more likely to have most types of insurance
- Table Figure 23: Penetration rates rise in line with company size
- The SME insurance market registered steady growth in 2021
- The Future of the UK SME Insurance Market
- SME GWP is set to rise steadily to GBP12.1 billion by 2026f
- Table Figure 24: SME market GWP is set to reach GBP12.1 billion by 2026f
- Table Figure 25: 2022 saw a significant rise in the number of remote workers among SMEs
- Table Figure 26: SMEs are aware that the COVID-19 pandemic increased their cyber risk
- Table Figure 27: SMEs are more likely to buy cyber insurance following the impact of the COVID-19 pandemic
- Table Figure 28: Larger SMEs are more willing to pay for pandemic insurance
- Table Figure 29: Larger SMEs are prepared to spend more on pandemic insurance
- SME GWP is set to rise steadily to GBP12.1 billion by 2026f
- Appendix
- Abbreviations and acronyms
- Definitions
- Methodology
- Table Figure 30: Forecasting methodology
- Secondary sources
- Further reading
- About GlobalData
- Contact Us
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