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UK SME Insurance: Market Dynamics and Opportunities 2016

Published By :

Verdict Financial

Published Date : Oct 2016

Category :

Banking

No. of Pages : 51 Pages

Summary
The UK SME insurance market has continued to grow. In 2015, the market was worth 7.7bn in gross written premiums (GWP), up 12.1% year-on-year. This has been driven by a growing economy, which has facilitated increases in the number of SMEs in the UK and consequently the opportunity to sell commercial insurance.

Key Findings
-Micro businesses account for 95.5% of UK private sector enterprises and 18.1% of generated turnover.

-Uptake of cyber insurance and directors and officers liability insurance has risen by 11.6 and 10.5 percentage points respectively since 2014.

-38.0% of SMEs are concerned about an event that would stop them trading.

-The UK SME insurance market is forecast to be worth 9.04bn in 2020.

Synopsis
Verdict Financials UK SME Insurance: Market Dynamics and Opportunities 2016 report analyzes the UK SME insurance market. Economic factors including GDP growth, SME business confidence, and unemployment rates are explored in relation to the UKs business landscape. Growth in the number of SMEs is explored by business size and industry. The SME market is discussed in relation to the uptake of commercial insurance. Finally an estimate of the current and historic market size is provided, in addition to a five-year forecast.

ReasonsToBuy
-Be aware of the significance of SMEs within the commercial insurance market and how they are influenced by the UK economy.

-Adapt your strategy and ensure you remain competitive by understanding the opportunities for growth within the SME insurance market.

-Recognize the challenges the SME insurance market faces.
Table of Contents
EXECUTIVE SUMMARY
The SME market is a growth opportunity for commercial insurers
Key findings
Critical success factors
MARKET DYNAMICS
Introduction
The UK economy is continuing to grow, albeit at a slightly slower rate
The service industry has been driving economic growth in the UK
The number of company liquidations continues to fall as the economy grows
There has been a 6.2% annual increase in the number of companies registered in 201516
Small business confidence reached its lowest rate since Q4 2012 in Q2 2016
The UK unemployment rate has reached its lowest level since 2005
The number of UK SMEs continues to grow, driven by micro enterprises
SMEs account for a significant proportion of the UK business environment
The number of SMEs has continued to grow, driven by micro enterprises
The construction sector dominates the SME market by business numbers
The wholesale and retail sector dominates the SME market by turnover
The SME market is an opportunity for insurers to grow their books
Penetration for common commercial products remains static but is increasing for less-established products
Uptake of cyber insurance has risen 11.6 percentage points since 2014
D&O liability insurance has become a more popular purchase since 2014
Uptake of commercial insurance increases with business size
Insurance product penetration varies by SME industry
SMEs are most concerned about an event that would stop them trading
THE MARKET GOING FORWARD
SME insurance market GWP was estimated at 7.7bn in 2015
The SME insurance market continues to grow as the number of UK SMEs rises
The UK SME insurance market is forecast to be worth 9.04bn in 2020
Growth in the number of SMEs will be reflective of the UK economy
Product penetration for SMEs will increase, which will grow SMEs share of the total commercial market
Brexit will impact the UK economy and consequently SMEs
The UK will have to negotiate new international trade deals following Brexit
A weak pound has made imports more expensive but exports cheaper for buying countries
If free movement is restricted the UK could see a shortage of skilled workers
Business profits are likely to fall if household disposable income is squeezed
APPENDIX
Abbreviations and acronyms
Definitions
Brokers
Earned premiums
Gross premiums
Price comparison websites
SME
Written premiums
Methodology
Primary and secondary research
Verdict Financial's UK SME Insurance Survey
Market sizing and forecasting methodology
Bibliography
Further reading
About Verdict Financial
Disclaimer

List of Tables
Table 1: UK GDP quarter-on-quarter growth, Q1 2008-Q2 2016
Table 2: Growth, Q2 2016 on the same quarter a year ago, for the output components of GDP
Table 3: Company liquidations in England and Wales, 2008-Q2 2016
Table 4: Changes in the number of UK companies (000s), 2011-16
Table 5: Small Business Confidence Index, Q1 2010-Q2 2016
Table 6: Small Business Confidence Index by industry, Q1 2015-Q2 2016
Table 7: UK unemployment rate, Q1 2008-Q2 2016
Table 8: UK employment rate, Q1 2008-Q2 2016
Table 9: UK private enterprise volume, employment, employees, and turnover by business size, 2015
Table 10: Number of SMEs in the UK private sector, by business size, 2008-15
Table 11: The number of UK SMEs by industry sector and size sub-segment (%), 2015
Table 12: Turnover of UK SMEs by industry sector and size sub-segment (%), 2015
Table 13: Insurance penetration among SMEs surveyed (%), 2014-16
Table 14: Insurance penetration among surveyed SMEs, by business size (%), 2016
Table 15: Insurance penetration among surveyed SMEs, by industry (%), 2016
Table 16: Concerns of SMEs (%), 2016
Table 17: UK SME GWP and annual growth, 2012-15
Table 18: UK SME insurance market GWP forecast (m), 2012-20f
Table 19: Forecasted annual GDP percentage growth (%), 2011-20f

List of Figures
Figure 1: UK GDP has grown for 14 quarters in a row since Q4 2012
Figure 2: Services are driving growth of the UK economy
Figure 3: The number of company liquidations has fallen by 32.7% since peaking in 2009
Figure 4: There are 3.7 million companies registered in the UK as of 2015-16
Figure 5: Small business confidence has fallen since 2015 but still remains positive
Figure 6: Q1 2016 saw multiple industries enter negative business confidence
Figure 7: The UK unemployment rate continues to fall while the employment rate rises in 2016
Figure 8: SMEs account for 99.9% of UK private enterprises but just under half of turnover
Figure 9: The number of SMEs in the private sector has grown by 26.7% since 2015
Figure 10: All business segments have recorded growth since 2013
Figure 11: Construction dominates the micro enterprise segment
Figure 12: The wholesale and retail industry dominates all SME sub-groups by turnover
Figure 13: Public and employers' liability are the most commonly purchased SME products
Figure 14: The penetration of commercial insurance increases with enterprise size
Figure 15: Public liability is the most common product held by SMEs across most industries
Figure 16: SMEs are most concerned about an event that would stop them trading
Figure 17: SME market GWP grew by 12.1% in 2015
Figure 18: Micro enterprises account for 62.7% of SME market GWP
Figure 19: The SME market is forecast to be worth 9.04bn in 2020
Figure 20: Economic growth will slow in 2017 following Brexit before recovering going forward

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