United Kingdom (UK) SME Insurance - Market Dynamics and Opportunities 2020

United Kingdom (UK) SME Insurance - Market Dynamics and Opportunities 2020


The UK SME market generated approximately £8.3bn in gross written premiums (GWP) in 2019, growing marginally by 1.0%. With a hardening insurance market we would have expected to see more significant premium growth in 2020. However, due to the COVID-19 pandemic the SME insurance market is expected to contract by 4.7% in 2020, mainly driven by the government-imposed lockdown for the majority of Q2. As the year draws to a close, coronavirus cases are on the rise again, with countrywide lockdowns enforced across the UK threatening the partial recovery seen in Q3.

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 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.


  • The SME insurance market is expected to contract in 2021 before returning to growth in 2022.
  • In 2024, the market is expected to generate £8.9bn in GWP.
  • 11.4% of SMEs canceled at least one insurance policy as a result of the coronavirus pandemic.
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 the challenges the SME insurance market faces.
  • See GlobalData’s forecasts for the SME market.

  • Executive Summary
    • COVID-19 has reversed years of growth
    • Key findings
    • Critical success factors
  • The Shape of the UK SME Space
    • Introduction
    • SMEs account for the vast majority of UK businesses
      • The number of SMEs has been steadily growing since 2018
        • Table The number of SMEs in the UK private sector by business size, 2011–20
        • Table UK private enterprise volume, employment, employees, and turnover by business size, start of 2020
        • Table Figure 1: UK SMEs account for the majority of private businesses but around half of total turnover
      • New company incorporations decreased between 2019 and 2020
        • Table The number of company registrations in the UK (000s), 2014–20
      • Company liquidations dropped as a result of the country-wide lockdown
        • Table Figure 2: Company liquidations decreased in the first half of 2020 due to reduced court capacity
      • Wholesalers and retailers are vital to the SME economy
        • Table Figure 3: More than half of SME turnover is generated by three industries (out of 16)
    • Macroeconomic impact on the SME market
      • Table Figure 4: More than half of all SMEs operated at 50% capacity or less during the initial lockdown
      • Table Figure 5: Business closures were most prevalent among hotels and restaurants
      • Table Figure 6: Consumer sentiment is on a downward trend moving into Q4
    • UK GDP is set to drop substantially in 2020
      • Table Figure 7: UK GDP fell sharply in Q2 2020
      • Some jobs have been temporarily saved by the furlough scheme
        • Table Figure 8: The number of people on Universal Credit substantially increased in April 2020
        • Table Figure 9: The UK unemployment rate has been steadily rising since the onset of coronavirus
      • Real earnings have fallen as a result of the pandemic
        • Table Figure 10: Individuals have seen their purchasing power falter since Q1 2020
    • Fallout from COVID-19 remains businesses' key concern
      • Table Figure 11: Businesses are concerned about COVID-19 impacts
      • Wholesalers, retailers, restaurants, and hotels are most concerned about staying afloat
        • Table Figure 12: A fifth of SMEs in the hotel and restaurant industry are extremely concerned about revenue
  • The UK SME Insurance Market
    • The commercial insurance market grew marginally in 2019
      • Table Figure 13: The SME insurance market saw minimal growth in 2019
      • Commercial insurance rates have been increasing
        • Table Figure 14: Most commercial insurance rates have been steadily increasing
    • COVID-19 has caused SMEs to cancel policies
      • Table Figure 15: There has been a fall in insurance uptake due to COVID-19
    • Penetration rates have fallen across a number of insurance lines
      • Table Figure 16: A number of lines of business have seen drops in penetration rate
      • Table Product uptake among UK SMEs, 2017–20
    • Larger SMEs are more likely to hold every type of insurance
      • Table Figure 17: Penetration rates increase as businesses get larger
  • The Future of the UK SME Insurance Market
    • SME GWP is expected to fall by 4.7% in 2020
      • Table Figure 18: SME GWP is expected to rebound in 2022 after two years of negative growth
      • More SMEs could cancel their policies in the short term
        • Table The proportion of SMEs thinking about cancelling a given product
      • Commercial property will take a hit from COVID-19
        • Table Figure 19: SMEs have seen a substantial increase in employees working remotely
        • Table Figure 20: The majority of SMEs think remote working levels will remain higher than before coronavirus
      • Cyber insurance will become more popular as a result of COVID-19
        • Table Figure 21: SMEs are aware that they face increased cyber risk because of COVID-19
        • Table Figure 22: SMEs are more likely to purchase cyber insurance because of COVID-19
      • Business interruption insurance will undergo major changes
        • Table Figure 23: Medium businesses are most likely to pay for pandemic insurance
        • Table Figure 24: Larger businesses are willing to pay more for pandemic insurance
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • SME
    • Methodology
      • GlobalData's UK SME Insurance Survey
      • Market sizing
      • Comparing the data with previous editions of this report
      • Forecasting methodology
        • Table Figure 25: Forecasting methodology
    • Secondary sources
    • Further reading

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