UK business insurance statistics 2025

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

A whopping 99.8% of private businesses in the UK are SMEs. They bring in just over half (52.5%) 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.

All statistics are up-to-date at the time of publishing.

UK business insurance statistics at a glance

The UK insurance industry is the largest in Europe and the third largest in the world. It invests £23bn into the economy each year. Business insurance makes up just over £15.5bn of that market.

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

Here are some key UK small business insurance facts:

• 44% of SMEs have no insurance, according to Allianz
• In addition, 80% 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
• Less than half of small businesses (49%) and micro-businesses (41%) have their cyber risks insured.
• Only 8% of UK businesses have a standalone cyber insurance policy.

How many businesses don’t have insurance?

A survey by Allianz found that the proportion of UK SMEs and sole traders without any cover grew from 40% in 2021 to 44% in 2022. That’s more than 2.1m companies working without insurance of any kind to protect them.

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 cover to protect them.

According to Allianz’s research, four in every five (80%) SMEs are underinsured.

Underinsurance can happen for lots of different reasons. Like when business owners underestimate how long it’ll take them to recover after a loss. It’s estimated that 43% of business interruption policies are subject to underinsurance, with an average shortfall of 53%.

Allianz’s survey also found that despite many SMEs changing how they operate, only 41% updated their policy to reflect this; 52%, did not.

Property underinsurance is also on the rise, with Aviva estimating that 45% of commercial properties in the UK might 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. And to update their existing business insurance policies if their circumstances change (eg because they’ve moved to new premises or changed what they do).

The effects of rising cost pressures on small business insurance statistics

Over 71% of SMEs in the UK say rising cost pressures have negatively impacted their business. And 19% of SMEs reduced their insurance payments in 2023.

This affects small business insurance statistics as it indicates a change in the behaviour of SMEs. According to Allianz, more than half (51%) stopped buying at least one type of business insurance cover in 2023.

They cited day-to-day challenges including:

• Energy bills (53%)
• Supply chain problems (35%)
• Late payments or unpaid invoices (30%)

While 60% of SMEs kept their insurance cover unchanged, 21% increased it, citing the following threats to their business:

• Inflation and cost-of-living (64%)
• The state of the UK economy (33%)
• The impact of Brexit (25%).

How much do UK small businesses spend on insurance?

Over 80% of SMEs bought packaged insurance in 2023, and more than 60% bought their insurance online. Insurance brokers accounted for 43.7% of all purchases made by SMEs.

It’s hard to say what the average UK 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.

These business insurance facts can give a rough guide:

• 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.

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 (PI) claims 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 2024, globally, were cyber incidents (38%), business interruption risks (31%), and natural catastrophes (21%).

This varies slightly for smaller businesses, where the risks are localised and more immediate. Their biggest concerns were cyber incidents (35%), changes in legislation and regulation (28%), and business interruption (26%).

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%.

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.

Professional indemnity insurance 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. Yet research by BIBA found that 22% of businesses stopped buying PI insurance in 2023.

The UK PI market was estimated to be worth £3.3bn in 2023, up from £2.9bn in 2021.

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 £350m.

Employers’ liability insurance statistics

If you employ anyone, it’s a legal obligation to have employers’ liability (EL). It protects your workers from accidents and workplace-related illnesses. And it helps you out too.

Workplace illnesses cost employers £4,400 on average, according to the Health and Safety Executive. If an illness results in their worker being off work for longer than a week, it can cost them over twice as much (£9,200).

Yet research from the British Insurance Brokers Association (BIBA) found that 26% of SMEs stopped buying compulsory EL in 2023.

Some interesting employers’ liability insurance facts:

• Companies reported over 2m workplace injuries and illnesses in 2024. That year, 44,547 new employers’ liability claims were registered.
• Employers’ liability claims can take years to settle, which explains why the number of claims settled (53,074) outweighs the number of new claims registered.
• The average cost of employers’ liability insurance per office employee is £61.
• Around 1 out of every 45 injured or ill employees has a successful lawsuit against their employer.

Cyber insurance statistics

50% of businesses reported experiencing a cybersecurity attack or breach in 2024.

Yet despite cyber-attacks continuing to be identified as the top risk to companies of all sizes, only four in ten businesses (43%) are insured against cybersecurity risks.

Compared with statistics gathered in 2023, this means the overall number of businesses with cyber insurance in the UK has risen by 6%. And that 62% of medium-sized businesses, 49% of small businesses, and 41% of micro-businesses are covered.

Of those, only 8% have a specific cyber policy (a slight increase of 2% since 2021). Most (35%) hold cyber security insurance as part of a wider insurance policy.

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.

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.

Despite this, these business insurance statistics show there’s a tendency among SMEs to reduce or cancel their insurance cover, which is a worrying trend.

For peace of mind, it’s advisable to have the right insurance. 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.

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

If you’re not sure what type of insurance you need, our guide for small businesses provides a handy reference. Or, you can give us a call on 0345 222 5391 and one of our friendly advisers will help you out.

Image used under license from Shutterstock.