United Kingdom (UK) SME Insurance - Distribution Dynamics 2023

Abstract

This report looks at how UK SMEs buy a range of commercial insurance products and the reasons behind their purchasing decisions. It examines the channels used by SMEs when purchasing insurance, pre-purchase activities, switching behavior, and the factors most important to SMEs when selecting or switching provider.

Brokers remain the key distribution channel for SME insurance in 2023, accounting for 43.7% of the market. Usage of price comparison websites (PCWs) increased during the year as more companies seek good value from their insurance products. Price is the most important factor to SMEs when choosing a provider and also the leading reason why companies change provider. Medium-sized companies consider a wider range of factors when selecting their provider. The cost-of-living crisis is having a tangible effect on the way SMEs do business. With cashflow problems brought about due to dwindling consumer demand, companies are having to seek better value in their insurance deals or cancel policies altogether. As a result, SMEs are increasingly reviewing the cover they have in place and the associated costs.

Scope

• Brokers remain the key distribution channel for SME insurance in 2023, accounting for 43.7% of the market. However, this figure is the lowest of the past five years. Many SMEs have made greater use of PCWs in search of better deals amid the cost-of-living crisis.
• Price is the most important factor for SMEs of all sizes when choosing a provider. Over a third of sole traders say price is the most important factor to them.
• Companies are more likely to consider making changes to their policy (either cancel or switch provider) as their size increases. Medium enterprises pay the highest premiums and are therefore keenest to seek better value or cancel policies that are not bringing the best possible value to the company.

Reasons to Buy

• Determine the purchasing channels and methods used by SMEs of all sizes in 2023.
• Understand the most important factors to SMEs when it comes to selecting an insurance provider.
• Improve customer retention by seeing the key reasons why SMEs change providers for various products.
• Ascertain how the cost-of-living crisis is affecting SMEs' decision to switch or cancel their policies.
• See how open SMEs are to using AI to improve their customer experience in the purchasing journey.