After several years of turbulence, the UK insurance market is showing signs of softening, which is a welcome shift for many SME-sized businesses. This change presents both opportunities and challenges for policyholders to consider. Understanding what areas of the market are easing and how to respond strategically can help your business secure better coverage, manage costs, and prepare for future shifts or markets that remain rigid.
As your broker may have explained, the insurance market operates in cycles. Following the disruption and economic instability that COVID-19 pandemic brought about, many sectors experienced a hard market, which meant insurers had reduced capacity, rising premiums, and stricter underwriting. This was driven by increased claims and external shocks such as the Grenfell Tower tragedy, which led to a retreat from high-risk sectors like design-and-build construction.
However, as insurers recover and profitability improves, capacity is returning. This shift is creating a more competitive environment, particularly in generalist lines, where supply is increasing and pricing is becoming more favourable.
Here are just some of the areas of softening and potential actions you can take:
- Liability insurance:
The recent change in the Ogden rate to +0.5 per cent has reduced the reserves insurers must hold for long-term injury claims. This has eased pressure on liability pricing, making it more affordable to increase limits.
Potential action: Consider increasing your primary limits rather than relying on excess layers. This could reduce your premium or allow excess layers to attach at a higher level. - Cyber insurance:
Despite rising threats and frequent incidents involving well-known brands, cyber insurance is becoming more accessible. The Government’s 2025 SME Digital Adoption Taskforce Final Report found that basic cyber hygiene practices, such as multi-factor authentication, secure passwords, and regular software updates, are still underutilised across the SME sector.
Potential action: Explore alternative cyber markets. Many insurers are aggressively pursuing new business, which could allow you to secure higher limits at competitive rates. - Fleet and motor insurance:
During COVID, claims dropped due to reduced vehicle usage. While remote working remains common, the market has now rebalanced. Fleet insurance is no longer under the same pressure it faced during the pandemic.
Potential action: Consider implementing driver training tools (e.g., Lightfoot) to demonstrate above-average driver performance. This can help insurers apply further discounts to your policy rating. - Cyber insurance:
Despite rising threats and frequent incidents involving well-known brands, cyber insurance is becoming more accessible. The Government’s 2025 SME Digital Adoption Taskforce Final Report found that basic cyber hygiene practices, such as multi-factor authentication, secure passwords, and regular software updates, are still underutilised across the SME sector.
Potential action: Explore alternative cyber markets. Many insurers are aggressively pursuing new business, which could allow you to secure higher limits at competitive rates. - Property insurance:
Rebuild cost assessments are becoming more accurate and less punitive. Businesses that saw insured values double during the hard market may now benefit from more reasonable valuations and premiums.
Potential action: Reassess your sums insured, especially if valuations are over three years old. If your business now operates under a hybrid model, consider whether your current reinstatement basis reflects how you would actually rebuild. A different approach may better suit your current setup.
While conditions are improving, this isn’t universal. Niche or high-risk sectors, like exporting medical products, may still face limited insurer appetite and elevated costs. In such cases, coverage enhancements may be more achievable than price reductions.
As with a mortgage, you should consider locking in multi-year deals to hedge against future market hardening.
In general, this is a time to just start the conversation either with your broker, or the insurer if you organised this directly. Brokers play a vital role in tailoring coverage to fit each business’s unique risk profile. Whether it’s adjusting limits, exploring new products, or leveraging insurer-provided risk management tools, proactive engagement can yield significant benefits.
The current market presents a valuable window to reassess your insurance – whether you’re aiming to enhance coverage, reduce costs, or invest in risk management.
Speak with your broker or insurer about your current policies to ensure you are able to take advantage of potential savings and/or more comprehensive coverage.
This article comes courtesy of Howden – an expert insurance group that does insurance differently – offering flexible, high-quality cover, and reassuringly straightforward service, while using insurance as a tool to increase resilience. United by a no-limits mindset, Howden is a powerful and passionate team, rising to any challenge to do right by your business.
