• Vehicle, property and public and product liability insurance most likely to be increased Premium Credit’s Insurance Index shows
• But underinsurance remains an issue for SMEs as nearly one in five firms say they expect it to get worse

New research* from the UK’s leading insurance premium finance company, Premium Credit, shows SMEs are planning to boost insurance cover in the year ahead but underinsurance remains an issue.

Its Insurance Index, which monitors insurance buying and how it is financed, found one in 10 SMEs plan to increase the level of insurance cover in the year ahead while another 28% are unsure whether they will. Just one in 14 (7%) questioned said their firm is likely to cancel and not replace policies in the year ahead.

SMEs are most likely to increase property cover – 40% of those planning to spend more - while 35% say they will increase public and product liability and a third (33%) plan to increase vehicle cover. Around 30% say they will boost their level of cyber cover.

The index shows a trend in paying for annual insurance monthly instead of in a lump sum. Around 15% of SMEs questioned this year have switched to monthly payments for insurance continuing the trend from last year’s index** which saw 15% move away from lump sums.

However firms admit that underinsurance is an issue – nearly one in five (18%) say their level of underinsurance has increased in the past 12 months. The same number (18%) expect underinsurance to increase in the year ahead.

SMEs are running down the amount of cash they have with a quarter (23%) saying the amount of cash reserves they have has dropped since the start of the cost of living crisis four years ago. However that is down on last year which found 28% saying the amount of cash they have has fallen. Around one in 20 this year (5%) say they have no cash.

A quarter (25%) said the amount of cash in the business has increased since the start of the cost of living crisis compared with 20% in last year’s index.

Owen Thomas, Chief Sales Officer, at Premium Credit said: “It is encouraging to see that SMEs are thinking about their insurance needs with substantial numbers planning to increase cover in the year ahead.

“However underinsurance is a major issue with many companies acknowledging that they do not have enough insurance for their business and run the risk of not being able to claim when they need to do so.

“Premium finance is a very cost-effective way for businesses to buy insurance and better manage their finances and cashflow by spreading payments. Our research shows more firms are switching to monthly payments to buy insurance for this very reason.”

(*) Independent research conducted by Viewsbank online among 988 SME owners and managers between March 7th and 11th 2025
(**) Independent research conducted by Viewsbank online among 1,332 SME owners and managers between March 22nd and 26th 2024