Green shoots, real risks: why resilience must power the UK’s growth mission
Graeme Trudgill, Chief Executive
| British Insurance Brokers Association
Insurance brokers are key to building business resilience, yet underinsurance threatens recovery. Urgent action is needed to close protection gaps and safeguard long-term economic growth.
The national mission to kickstart economic growth is beginning to show signs of progress. Insurance premiums have fallen, as have interest rates and with better financial forecasts, it seems to suggest cause for cautious optimism. These are no doubt positive signs for the government, but it would be a mistake to overlook the fragility of the recovery.
The government has an opportunity to deliver sustained economic growth. However, building lasting prosperity requires urgent action to build economic resilience to protect the economy from further shocks and to create the conditions for economic growth.
This is particularly vital among small businesses which are the lifeblood of commerce, communities and of our future economic growth. Insurance brokers are a vital source of insurance protection for UK business, with 94 per cent of commercial insurance bought through an insurance intermediary (BIBA 2024). We know companies which have a more secure financial outlook are best placed to survive economic hardship and are more confident in investing to grow.
And yet this is where resilience is perhaps most precarious.
In 2023-24 (Opinium) 52 per cent of SMEs and 49 per cent of Medium sized businesses reduced their insurance cover, thus leaving the economy exposed to shocks. It is estimated that up to 80 per cent of SMEs in the UK are underinsured, with one in five SMEs experiencing major disruptions each year to underinsurance (Stevenson Insurance Group, 2024). Cyber Risk is especially concerning, 55 per cent of businesses lack standalone cyber insurance even though 43 per cent experienced a breach last year. This is not just a gap; this is a vulnerability.
We must reverse this trend.
So how do we shift the trajectory upwards?
1. Promote the role of brokers in closing the protection gap
Brokers help businesses assess risk and secure appropriate cover. For example, 28 per cent of sole traders lack confidence in assessing their insurance needs (Opinium 2024). The gap between the risk to a business and the level of cover is what we refer to as the protection gap. Closing these gaps requires expert advice, a role perfectly suited to insurance brokers.
2. Launch a national conversation on business resilience
Rising costs, challenging supply chains, strains in the labour market, and political uncertainty have made resilience harder to achieve. Government needs to work closely with insurance brokers, the broader insurance industry and businesses to develop solutions to and incentivise investment in closing the protection gap.
3. Confront long-term risks head on
From floods to cyber threats, long-term risks demand long-term thinking. With Flood Re, the UK’s re-insurance scheme for household flood insurance, ending in 2039, and 40 per cent of SME’s never reopening after a flood (FloodFlash 2022) we need a national strategy for risk management now, not in the future.
4. Deliver a pro business Autumn Budget
We need businesses to take risks and grow otherwise we threaten to go backwards, not forwards and the Autumn Budget is a pivotal moment. We urge the government to ensure it is pro-business by incentivising investment in insurance measures and cutting the cost to do so by cutting Insurance Premium Tax from 12 per cent to 10 per cent.
Insurance brokers are at the heart of protecting businesses of all sizes. By closing protection gaps and building resilience, brokers can safeguard the economic momentum and enable the government’s vision for lasting growth. We stand ready to play our part.
Read the 2025 BIBA Manifesto Partnering to deliver value at www.bibamanifesto.com
