The UK small and medium-sized enterprises (SME) insurance market registered a 3.6% growth in 2017, but remains flat in recent years, despite the number of businesses in the UK continuing to grow year-on-year, according to research undertaken by GlobalData.
GlobalData’s latest report ‘UK SME insurance market Dynamics and Opportunities 2018’ notes that a key trend has been declining penetration rates, especially among smaller SMEs.
Competition remains strong within the market and insurers can only pull away from competitors and succeed if they find an effective way to engage with micro businesses, and especially sole traders.
Ben Carey-Evans, Insurance Analyst at GlobalData, comments: “This is a worrying trend for insurers, as the majority of new businesses fall into this size category. If insurers want to expand their portfolios, they have to target this group successfully, with cheap and easy-to-understand policies.”
According to GlobalData’s 2018 UK SME Insurance Survey, insurance penetration rates saw double-digit percentage point declines for sole traders, and SMEs with between one and four employees, in 2018. In 2017, the number of micro businesses (1-9 employees) rose by nearly 200,000 and sole traders grew a further 155,500. These new businesses are likely to be less informed about what insurance they require, so there is extra emphasis placed on insurers to actively seek them out and educate them.
Carey-Evans concludes, “As many of these sole traders will be entering into new territory the information, they receive is crucial. They will receive advice on business bank accounts and tax, for example, but fewer resources are available for insurance. Most sole traders will have transferrable experience in lines such as property and commercial motor from personal lines, so it is the liabilities that insurers really need to emphasize the importance of. They need to explain to sole traders it isn’t just a grudge payment, but something that can save their business a great deal of money.”