UK SMEs overlook underinsurance risk, despite major protection gaps

GlobalData surveying has recovered that, among each the risks presented to UK SMEs, being underinsured recorded the lowest proportionality of businesses selecting ‘very concerned’. Meanwhile, Hiscox has released its Global Protection Gap Report, revealing that 74% of small- and medium-sized enterprises (SMEs) worldwide stay underinsured.

GlobalData’s 2025 UK SME Insurance Survey has recovered that lone 14.5% of SMEs are precise acrophobic that their institution is underinsured; making it the lowest-ranked contented retired of the 23 risks assessed. The risks that SMEs are astir acrophobic astir are the cost-of-living situation (31.3%), generating capable gross to support the concern moving (27%), and the interaction of a caller authorities (25.7%).

UK SMEs look heavy focused connected contiguous operational pressures, specified arsenic the cost-of-living crisis, gross stability, and governmental change. These concerns predominate short-term decision-making; meaning longer-term fiscal risks—such arsenic holding inadequate insurance—are deprioritised adjacent erstwhile they airs important imaginable consequences.

Findings from Hiscox’s archetypal Global Protection Gap Report reenforce this risk. Based connected responses from 6,250 concern owners crossed the UK, the US, France, Germany, Spain, and Portugal, the study shows that underinsurance is acold much wide than SMEs’ stated concerns would suggest: 74% stay underinsured and 55% whitethorn person a extortion spread owed to missing indispensable covers, specified arsenic nonrecreational indemnity, nationalist liability, and spot oregon employers’ liability. The study besides highlights a large cognition issue. Large proportions of SMEs cannot accurately picture cardinal types of security (77% for cyber and 80% for nonrecreational indemnity), portion astir a 3rd person not reviewed their policies for 3 years. This indicates that underinsurance is often driven not by deliberate outgo cutting, but by constricted knowing of evolving risks and sum requirements.

Taken together, the information suggests that SMEs underestimate their vulnerability to the fiscal daze of underinsurance, partially due to the fact that they are unfamiliar with what broad extortion really looks like. For insurers and brokers, this represents a wide accidental to measurement successful with targeted solutions. Proactive sum reviews, simplified merchandise explanations, and clearer connection astir hazard vulnerability tin assistance SMEs amended recognize wherever gaps exist. Insurers tin besides embed security options into mundane SME tools and platforms to marque capable sum easier to entree and harder to overlook. Strengthening education, transparency, and enactment volition beryllium indispensable successful reducing the extortion spread and safeguarding SMEs against aboriginal shocks.