Curious about how small businesses are handling risk right now? These up‑to‑date UK business insurance statistics reveal how SMEs are protecting themselves and where many are still leaving big gaps.
SMEs remain the backbone of the UK economy. There are 5.6 million of them, making up 99.85% of all businesses. Together they generate 51% of total turnover and account for 60% of UK employment.
Despite their importance, almost half of these businesses have no commercial insurance. And among those who do, many don’t have enough cover, often unintentionally. Some areas, like cyber insurance, are seeing more awareness, but overall protection is still patchy.
Need help choosing the right business insurance? Take a look at how we can support you with guidance and advice on what you may need.
UK business insurance statistics at a glance
The UK insurance industry is the largest in Europe and the third largest globally.
The London Market (speciality/reinsurance, which includes business insurance) contributes almost £50bn to the economy each year.
UK spending on insurance varies hugely by business size:
- Sole traders typically spend £250–£499 a year on insurance.
- SMEs with 50–249 employees spend £10k–£19.9k.
Despite this, many SMEs aren’t reviewing their policies regularly. Only half reviewed their cover in the last year.
Other key UK small business insurance facts:
- Only around half of SMEs in the UK have employers and public liability insurance
- 40% of SMEs have made an insurance claim, and most were accepted.
- Uptake of cyber cover is increasing, with almost half (45%) of all businesses having some form of cyber cover.
- Many SMEs only buy insurance to meet legal or contractual requirements rather than seeing it as part of a wider risk strategy.
How many businesses don’t have insurance?
Almost all SMEs have insurance of some kind. However, 28% of sole traders have no insurance at all. And even more concerning, 39% of companies with one to nine employees don’t have employers’ liability insurance – despite it being a legal requirement.
Other interesting business insurance statistics:
- 55% of businesses globally may be missing core covers like professional indemnity or public liability.
- Of the 48% of SMEs who have physical premises, only 34% report having building insurance and 23% have business interruption insurance.
- Only 31% of SMEs with portable electronic equipment have contents insurance.
- Among businesses that have company vehicles, only 61% say they have commercial vehicle insurance.
One of the reasons for businesses being uninsured is likely a lack of understanding about what they need. A GlobalData survey found there were significant gaps in knowledge:
- 77% of SMEs don’t know what cyber insurance actually does
- 80% can’t accurately describe professional indemnity insurance.
What percentage of businesses are underinsured?
We know almost half of SMEs have no insurance at all. But even among those who do, underinsurance (AKA not having enough insurance to cover their risks) is incredibly common.
A recent survey by Hiscox found nearly three quarters of small businesses are underinsured globally.
In 2025, research from Charterfields showed that 88% of commercial sites surveyed were underinsured on building values.
Only 50% of SMEs reviewed their insurance cover in the past year, and 40% say their biggest barrier is simply a lack of understanding. Only 14.5% of UK SMEs say they are actually concerned about being underinsured.
This shows the vital role a broker can play in educating and advising SMEs.
The effects of rising cost pressures on small business insurance statistics
Despite rising risks, being adequately insured ranked lowest of 23 concerns for SMEs in GlobalData’s survey.
Top current worries for UK SMEs right now:
- the cost‑of‑living crisis (31.3%)
- generating enough revenue (27.0%)
- the impact of a new government (25.7%).
For SMEs feeling financial pressure, insurance can be the safety net that keeps them afloat. Smaller businesses may have lower odds of facing a claim, but they’re also the least likely to survive one without insurance.
How much do UK small businesses spend on insurance?
The average spend on insurance varies significantly depending on business size:
- 47% of sole traders spend under £250 a year.
- SMEs with 1–9 employees spend £1,000–£1,999.
- SMEs with 10–49 employees spend £3,000–£4,999.
- SMEs with 50–249 employees spend £10,000–£19,999.
- Around 8% of large SMEs spend over £100,000.
81% of small business owners shop around for their insurance. However, only 52% actually switch. So while SMEs appear to be active shoppers, they're reluctant to switch.
The most common reasons for businesses to switch are:
- a lower price for the same/better cover,
- a poor claims experience with their current provider,
- or changes to their business that require different cover.
SMEs buy their insurance fairly evenly through different channels, including price comparison sites, direct insurers, and brokers.
What are the most common business insurance claims?
Around 40% of SMEs reported having made an insurance claim in the last year.
Property damage claims were the most common in 2025 (31%). Commercial vehicle incidents and equipment failure were joint second (27%).
According to ABI’s most recent study, the likelihood of a having to make a claim varies widely, depending on the size and nature of your business. So while a claim is an unusual scenario for a sole trader, it’s fairly routine for a medium business.
Claim likelihood increases with business size:
- 8% of sole traders
- 36% of SMEs with 1–9 employees
- 49% of SMEs with 10–49 employees
- 62% of SMEs with 50–249 employees
An ABI survey found that a very high percentage of claims made are accepted, with only between 3% and 10% turned down. However, many businesses only receive partial payment.
Between 25% and 32% of claims were partially paid because costs exceeded policy limits, and up to 11% were partially paid due to exclusions in policy terms.
Professional indemnity insurance statistics
The UK PI market was estimated to be worth £3.3bn in 2023, with around 1.5 million policyholders.
36% of UK SMEs have professional indemnity insurance.
Traditional professions like solicitors, accountants and architects account for 75-80% of the PI market – and most claims (56% of them from solicitors). The solicitor PI market alone is worth 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 £4,800 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 (£10,000).
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:
- 50% of all SMEs have employers’ liability insurance.
- 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.
- Around 1 out of every 45 injured or ill employees has a successful lawsuit against their employer.
Cyber insurance statistics
Cyber insurance has been something of a hot topic in the last year. With some colossal cyber-attacks affecting major UK companies in 2025, cyber insurance has been on everyone’s lips. UK insurers paid £197 million in cyber claims in 2024 – a huge 230% increase on the previous year.
43% of businesses reported experiencing a cybersecurity attack or breach in 2025.
On a more positive note, businesses do seem to be more aware of the risks and take steps to protect themselves.
Just under half of all businesses (45%) are now insured against cybersecurity risks. Figures are higher for SMES specifically, with 62% of small businesses and 65% of medium businesses being covered.
However, of those insured, only 7% of small businesses, 18% of medium businesses, and 27% of large businesses have a specific cyber policy. Most have cyber security insurance as part of a wider insurance policy.
Cybercrime is often seen as a problem that only affects large companies, but 96% of all cyber-attacks are directed at SMEs.
Unsurprisingly, AI is now cited as the second highest risk for businesses.
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.
insurance costssmall businessstatistics