GlobalData surveying has found that, among all the risks presented to UK SMEs, being underinsured recorded the lowest proportion 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 remain underinsured.
GlobalData’s 2025 UK SME Insurance Survey has found that only 14.5% of SMEs are very concerned that their company is underinsured; making it the lowest-ranked issue out of the 23 risks assessed. The risks that SMEs are most concerned about are the cost-of-living crisis (31.3%), generating enough revenue to keep the business running (27%), and the impact of a new government (25.7%).
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UK SMEs appear heavily focused on immediate operational pressures, such as the cost-of-living crisis, revenue stability, and political change. These concerns dominate short-term decision-making; meaning longer-term financial risks—such as holding inadequate insurance—are deprioritised even when they pose significant potential consequences.
Findings from Hiscox’s first Global Protection Gap Report reinforce this risk. Based on responses from 6,250 business owners across the UK, the US, France, Germany, Spain, and Portugal, the report shows that underinsurance is far more widespread than SMEs’ stated concerns would suggest: 74% remain underinsured and 55% may have a protection gap due to missing essential covers, such as professional indemnity, public liability, and property or employers’ liability. The report also highlights a major knowledge issue. Large proportions of SMEs cannot accurately describe key types of insurance (77% for cyber and 80% for professional indemnity), while around a third have not reviewed their policies for three years. This indicates that underinsurance is often driven not by deliberate cost cutting, but by limited understanding of evolving risks and coverage requirements.
Taken together, the data suggests that SMEs underestimate their exposure to the financial shock of underinsurance, partly because they are unfamiliar with what comprehensive protection actually looks like. For insurers and brokers, this represents a clear opportunity to step in with targeted solutions. Proactive coverage reviews, simplified product explanations, and clearer communication around risk exposure can help SMEs better understand where gaps exist. Insurers can also embed insurance options into everyday SME tools and platforms to make adequate coverage easier to access and harder to overlook. Strengthening education, transparency, and support will be essential in reducing the protection gap and safeguarding SMEs against future shocks.
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By GlobalData
