UK SME Insurance: Market Dynamics and Opportunities 2019

UK SME Insurance: Market Dynamics and Opportunities 2019


The UK SME insurance market saw growth pick up significantly in 2018, rising from 1.4% in 2017 to 6.3% in 2018. This was due to a slight shift in the makeup of SME business numbers, an uptick in penetration across the majority of product lines, and increased weather-based claims (a consequence of Storm Emma and the Beast from the East) that pushed up premiums. However, SMEs endured a difficult year in 2018 due to a stagnant economy, which has seen consumer and small business confidence plummet. The sector is very closely linked to the economy, and consequently SMEs remain very concerned about Brexit and its potential implications going forward. The performance of this sector is critical for the prospects of the wider insurance market in the UK, as commercial and SME lines provide higher growth opportunities for insurers than personal business.

This report analyzes the UK SME insurance market. Economic factors including GDP growth, SME business confidence, and unemployment rates are explored in relation to the UK’s business landscape. Growth in the number of SMEs is explored by business size and industry. The SME market is discussed in relation to the uptake of commercial insurance. Finally, an estimate of the current and historic market size is provided, in addition to a five-year forecast.


  • 10 out of the 11 insurance products covered in our SME Insurance Survey saw penetration rates rise in 2019, but overall penetration rates fell according to our 2019 Insurance Consumer Survey.
  • Brexit is the biggest concern for UK SMEs, with 45.3% of firms worried about its implications (up from 36.8% in 2017).
  • The UK SME insurance market is forecast to be worth £9.3bn by 2023.
  • The number of micro businesses declined by 0.6% in 2018, while small-sized enterprises (0.8%) and medium companies (2.9%) both increased.
Reasons to buy
  • Be aware of the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy.
  • Adapt your strategy and ensure you remain competitive by understanding the opportunities for growth within the SME insurance market.
  • Recognize challenges the SME insurance market faces.
  • See GlobalData’s forecasts for the SME market.

  • Executive Summary
    • The SME insurance market saw strong growth in 2018
    • Key findings
    • Critical success factors
  • The Shape of the UK SME Space
    • Introduction
    • The SME market is the backbone of the UK economy
      • The number of SMEs declined, but they still dominate total business
        • Table The number of SMEs in the UK private sector by business size, 2011-18
        • Table UK private enterprise volume, employment, employees, and turnover by business size, 2018
        • Table Figure 1: Micro businesses accounted for 95.6% of enterprises in the UK in 2018
        • Table The number of company registrations in the UK (000s), 2014-19
      • The number of company liquidations saw its third consecutive rise in 2018, but the growth rate dropped
        • Table Figure 2: Growth in company liquidations dipped in 2018
      • Construction leads the SME market by business numbers while wholesale dominates turnover
        • Table Figure 3: Wholesale features prominently in all four SME categories for number of businesses
        • Table Figure 4: Wholesale is dominant in terms of turnover for all companies with employees
    • Macroeconomic conditions affect the SME sector
      • UK GDP growth was stagnant up to the Q2 2019 decline
        • Table Figure 5: UK GDP growth turned negative in Q2 2019
        • Table UK GDP quarterly growth, 2009-Q2 2019
      • UK unemployment continues to fall to record lows
        • Table Figure 6: The UK unemployment rate has continued to decline
      • Real pay improved to slight growth in 2018 after declines in 2017
        • Table Figure 7: Real wages have shown slight growth in 2019
    • Key issues affecting SMEs beyond the economy
      • Business and consumer confidence have been affected by the possibility of a no-deal Brexit
        • Table Figure 8: Small business confidence has suffered since the Brexit vote
        • Table Figure 9: There was a sharp collapse in economic sentiment between 2016 and 2019
      • SMEs are still most concerned about Brexit and cybercrime
        • Table Figure 10: Brexit once again tops SMEs' list of concerns
        • Table Figure 11: SMEs' five biggest concerns all became more worrying in 2019
        • Table SMEs' top concerns, 2019
      • Business rates continue to rise at the start of each financial year
      • Rising pension contributions and minimum wages lead to SMEs' costs growing
        • Table Minimum pension contributions, 2018-19
        • Table The UK minimum wage by age group, 2010-19
      • Rising employment costs and economic uncertainty have led to growing use of freelancers
        • Table Figure 12: Outside of sole traders, SMEs are highly reliant on freelancers
    • The government has means to boost the SME sector
      • Government SME funding dipped in 2018, but a new fund was launched in 2019
        • Table Total government SME spend 2014-18
        • Table Government SME spend by business sector, 2018
      • The government and banks are aiming to spark investment in SMEs
  • The UK SME Insurance Market
    • The SME sector is strategically important for insurance
    • The SME market registered strong growth in 2018
      • Table Figure 13: The UK SME insurance market saw strong growth to £8.2bn in 2018
      • Rates for most commercial insurance products have grown steadily
        • Table Figure 14: Commercial vehicle premium hikes have been a key factor in overall market growth
    • The majority of SMEs hold at least one insurance product
      • Public liability is the leading SME insurance product
        • Table Figure 15: Public liability insurance has consistently high penetration across all types of SME
      • Insurance product penetration varies by industry, in line with the risks involved
        • Table Insurance penetration among surveyed SMEs by industry, 2019
      • Overall insurance penetration has fallen, but individual products saw increases
        • Table SME insurance penetration rates by size of business, 2016-19
        • Table Penetration rates by product line and size of business, changes from 2018 to 2019
        • Table Figure 16: Public liability is still the leading product, despite a second consecutive annual decline
  • The Future of the UK SME Insurance Market
    • SME insurance is set to exceed £9.0bn by 2022, but growth will remain slow
      • Table Figure 17: SME insurance is set to see slow but steady growth up to 2023
      • Table UK SME insurance market forecast, 2018-23f
    • SME insurance sector innovation is inspired by personal lines
      • Digital banks turn to SME insurance as the industry begins to modernize
      • Next Insurance - a one-stop shop for SMEs - becomes an insurtech unicorn
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • SME
    • Methodology
      • GlobalData's UK SME Insurance Survey
      • Market sizing
      • Forecasting methodology
        • Table Figure 18: Forecasting methodology
    • Secondary sources
    • Further reading
    • About GlobalData
      • Table Figure 19:About GlobalData

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