UK business insurance statistics

Want to know more about the business insurance claims landscape? Take a look at these fascinating UK business insurance statistics.

A whopping 99.9% of private businesses in the UK are SMEs. They bring in just over half of overall turnover. And yet almost half of those businesses have no commercial insurance and aren’t covering their backs.

Commercial insurance statistics show that claim rates are high in the UK. But many small businesses misunderstand or don’t see the value of being insured.

The following small business insurance statistics give an overview of:

• The most common claims
• The most popular types of business insurance
• How much money UK businesses spend reducing their risks.

Commercial insurance claims statistics at a glance

The UK insurance industry is the largest in Europe and the fourth largest in the world.

UK insurers pay out at least £22 million a day in business insurance claims. Such a figure shows the high degree of risk the business sector faces. £7.6 million a day comes from liability claims, of which £1.8 million is from employers’ liability.

Here are some key UK business insurance facts:

• 44% of SMEs don’t have any insurance
• Up to 40% of SMEs could be underinsured
• Fire & explosion is the biggest cause of loss by value in the UK
• Over a quarter of business insurance claims are professional indemnity-related
• Only 56% of medium-sized businesses and 40% of small businesses have cyber insurance.

What are the most common business insurance claims?

Claims paid out in the UK account for 20.5% of all paid claims throughout Europe.

Professional indemnity claims (PI) are most frequent in the UK, making up over a quarter of all claims. From professional negligence to breach of copyright, PI claims are becoming more prevalent.  

The biggest concerns for companies in 2023 were cyber incidents (34%) and business interruption risks (34%).

In the UK, fire/explosion is the biggest cause of loss by value. Events of this kind would likely be covered by various policies, from commercial property to business interruption insurance.

Top causes of loss:

1. Fire/explosion 24%
2. Faulty workmanship/maintenance 24%
3. Defective product 11%
4. Natural catastrophes 9%
5. Negligence/mis-advice 7%.

How many businesses are not insured?

The proportion of UK SMEs without any cover has grown from 40% in 2021 to 44% in 2022. That’s more than 2.4 million companies working without insurance of any kind to protect them.

Business interruption claims have increased dramatically and 21% of companies say they’ve experienced disruption of some kind. Despite this, 62% of companies either don’t have business interruption insurance or aren’t sure if it’s included in their policy.

Why don’t businesses buy insurance?

When business is going well, it’s easy to think you’re invincible. And who wants to fork out for insurance that you’ll probably never need anyway?

If only it was that simple. At the very least, if you employ anyone, it’s a legal obligation to have employers’ liability.

The main reasons respondents listed for not insuring their business are:

• The business is too small (47%)
• I work from home (42%)
• No customers come to my premises (34%)
• There's not much to insure, eg no premises, no vehicles (33%).

What percentage of businesses are underinsured?

We know that almost half of SMEs have no insurance at all. And it seems that plenty of those that are insured, don’t have enough. Up to 50% of UK SMEs could be underinsured.

With the recent rises in inflation and widespread disruption of supplies due to the war in Ukraine and extreme weather events, more businesses are likely to be underinsured. It’s more important now than ever for businesses to keep their commercial property valuations up to date as rebuilds and repairs cost more.

At least 43% of commercial properties in the UK are thought to be underinsured.

How much do UK small businesses spend on insurance?

Over 70% of SMEs bought packaged insurance in 2021, and more than 60% of SMEs bought their insurance online. Insurance brokers accounted for almost half of all purchases made by SMEs.

It’s hard to say what the average SME spends on insurance, when the size and nature of businesses varies so drastically. And so do their insurance needs. It goes without saying, that the more risks involved in running your business, the higher the premium will be.

The average cost of employers’ liability insurance per office employee is £61. This rises significantly to £213 per employee carrying out physical work, such as construction.

According to Nimblefins, the average cost of public liability cover for businesses in the UK is £118 a year.

How many businesses have cyber insurance?

Despite cyber-attacks being one of the most significant threats to companies of all sizes, only 56.2% of medium-sized businesses, 40% of small businesses, and 17% of micro businesses are covered by cyber insurance.

Due to the pandemic, many companies moved more of their operations online, and are therefore more at risk than they were. Yet uptake of cyber insurance is still low. Why?

Many are not even aware that cyber insurance exists. And those that do, have likely misunderstood its purpose and importance. Cybercrime is often seen a problem that only affects large companies, but 96% of all cyber-attacks are directed at SMEs.

Smaller businesses are more likely to be targeted. They’ll likely have less security, and cybercriminals are always looking for a fast and easy win. That makes cyber insurance an increasingly relevant type of cover for businesses to have in their insurance portfolio.

Professional indemnity insurance facts & statistics

Professional indemnity-related claims are the most frequent cause of claims in the UK, collectively accounting for over a quarter (26%) of the annual total.

The UK PI market was estimated to be worth £2.9bn in 2021, up 13% over 2020.

Traditional professions (solicitors, accountants, architects, chartered surveyors, financial advisors, and some healthcare professionals) account for 75-80% of the PI market.

Legal services are among the biggest buyers of PI insurance. The solicitor PI market is estimated to be around £340m.

What can we learn from these business insurance statistics?

Claims are always on the rise. An increasing ‘blame culture’, more extreme weather and other challenging political and environmental changes could mean difficult times ahead for businesses.

These business insurance statistics show there’s a low take-up of business insurance by SMEs, which is a worrying trend. With so many businesses risking their livelihoods, will we see the number of SMEs decline?

For peace of mind, it’s advisable to have the right insurance. For a small sum, you’ll know you’re protected, whatever mistake you make. Or when disaster strikes.

Professional indemnity insurance is there to protect your business from claims of negligence. With PI-related claims accounting for over a quarter of all claims, it’s certainly worth considering. No matter how small your business is. Because even a minor claim could cost you more than you can afford.

If you’re not sure what type of insurance you need, give us a call on 0345 561 0320 and one of our friendly advisers will help you out.

Image used under license from Shutterstock.