As a UK business leader in July 2025, understanding the commercial insurance landscape is vital for protecting your operations and seizing new opportunities. With a softening insurance market, evolving regulations, and rising risks like cyberattacks and climate change, the next 12 months will shape how businesses manage their exposures. This article, crafted for Newscast 24’s audience of decision-makers, explores the current state of UK B2B commercial insurance, key trends through mid-2026, and practical insights to help you navigate this dynamic environment.
A Buyer-Friendly Market: Lower Costs, Broader Coverage
The UK commercial insurance market in 2025 is experiencing softer conditions due to increased competition among insurers, leading to significant rate reductions:
- Professional Indemnity (PI): Premiums for mid-sized firms and larger enterprises have dropped by 5-20%, particularly for businesses with robust risk management.
- Liability Insurance: Rates are down 11-25%, with insurers offering long-term agreements to secure clients, benefiting businesses with stable operations.
- Property Insurance: Pricing has decreased by 11-20%, with broader coverage options, making it an ideal time to reassess property-related policies.
This competitive market enables businesses to secure cost-effective policies with enhanced coverage. However, evaluating policy terms carefully is crucial to ensure they meet your specific risk profile, especially as coverage options expand.
Regulatory Changes Impacting Your Business
Recent regulatory developments are reshaping how businesses approach insurance:
- Captive Insurance Regime: Announced in July 2025 by Chancellor Rachel Reeves, this new framework allows businesses to create their own insurance companies to manage risks internally. It’s particularly relevant for large enterprises in sectors like energy or manufacturing, offering potential cost savings and tailored risk solutions.
- Digital Operational Resilience Act (DORA): Effective from January 17, 2025, DORA imposes stricter cybersecurity and operational resilience requirements, especially for digital businesses, driving demand for cyber insurance to address compliance risks.
- Consumer Duty Standards: The Financial Conduct Authority (FCA) expanded its Consumer Duty requirements in 2024, emphasizing fair value and transparency in insurance products. This ensures policies deliver clear benefits, but businesses should scrutinize offerings to confirm they align with expectations.
- Funded Reinsurance Scrutiny: The Prudential Regulation Authority (PRA) introduced new reporting requirements (PS13/24) in 2024 for funded reinsurance, which may influence premium structures and insurer offerings.
These changes highlight the need to stay informed about compliance obligations and their impact on your insurance strategy.
Key Risks to Watch in 2025-2026
Several critical risks are driving insurance needs, requiring proactive attention from businesses:
Cybersecurity Threats
Cyber-attacks impacted 50% of UK businesses in 2024, with small and medium enterprises (SMEs)—over 99% of UK businesses—being prime targets (96% of attacks). Yet, only 43% have cyber insurance, with many SMEs citing reasons like believing they’re “too small” (47%) or protected by remote working (42%). Beyond these misconceptions, SMEs often face barriers such as difficulty understanding policy value, fear of complex claims processes, or lack of trust in insurers due to perceived administrative burdens. With DORA’s cybersecurity mandates approaching, businesses of all sizes should consider cyber coverage to protect against data breaches, ransomware, and compliance risks.
Business Interruption
Disruptions affected 21% of SMEs in 2024, yet 62% lack business interruption insurance or are unsure if it’s included in their policies. Rising inflation and supply chain challenges have left 32% of businesses underinsured, as they fail to update coverage for increased costs. Additionally, unresolved claims from COVID-19-related interruptions continue to create uncertainty, highlighting the need for clear policy terms and regular reviews to avoid coverage gaps.
Workplace Liabilities
Employers’ liability insurance is legally required for businesses with non-family employees, yet 26% of SMEs stopped purchasing it in 2023, risking fines and lawsuits. With over 2 million workplace injuries and illnesses reported in 2024, this coverage is critical, costing around £61 per office employee or £213 for physical workers (e.g., in construction). SMEs often overlook this due to cost concerns, confusion over legal requirements, or lack of awareness about its necessity.
Climate and ESG Pressures
Climate change is increasingly influencing insurance requirements, with insurers expecting businesses to address risks like water management and carbon-intensive investments, per the Climate Financial Risk Forum. Sectors such as energy, manufacturing, and property management face growing pressure to integrate environmental, social, and governance (ESG) considerations, driving demand for specialized coverage.
Claims Trends to Understand
Claims trends are shaping the insurance experience for businesses. Motor and transport insurance remains the most complained-about line, driven by rising repair costs (especially for electric vehicles) and delays in claims processing, which frustrate policyholders. Unresolved business interruption claims from the COVID-19 pandemic, now five years on, continue to create backlogs, impacting trust and renewals. Cyber insurance claims, while down 17% in cost from 2023 ($4.21 billion vs. $5.05 billion), remain complex due to the evolving nature of cyber threats. These trends underscore the importance of selecting policies with clear claims processes and responsive support.
Industry-Specific Insurance Needs
Different sectors face unique insurance demands in 2025:
- Construction: High-risk activities like working at height drive demand for public liability and specialty products like contractor binders. Cyber risks are also significant, with median losses of £27,000 per incident.
- Retail and Hospitality: Customer-facing businesses need public liability insurance (costing £60-£500 annually) to cover third-party injury or property damage claims, alongside business interruption protection for supply chain disruptions.
- Technology and E-commerce: The rise in cyber-attacks and DORA compliance requirements make cyber insurance a priority for digital businesses.
- Landlords and Property Management: New tools, like price tracking services, enable tailored insurance based on property locations and tenant profiles, addressing risks like property damage and liability.
- Aesthetics Industry: Recent government guidelines have increased demand for professional indemnity and public liability insurance for Botox and dermal filler providers.
Opportunities for Businesses
The evolving insurance landscape offers several opportunities:
- Captive Insurance for Large Firms: The new captive regime enables larger businesses to create in-house insurance solutions, potentially reducing costs and customizing coverage for complex risks in industries like energy or manufacturing.
- Cost Savings in a Soft Market: Rate reductions and broader coverage options allow businesses to secure competitive policies, particularly for liability and property insurance.
- Digital Tools for Smarter Choices: Over 60% of SMEs bought insurance online in 2023, and digital platforms make it easier to compare and customize policies, saving time and money.
- Niche Coverage Options: Specialized products, such as contractor binders or aesthetics insurance, provide tailored solutions for specific industries, enhancing protection.
The Role of Brokers in Navigating the Market
Insurance brokers are invaluable partners in navigating this complex landscape. They offer expertise in identifying industry-specific risks, securing competitive rates in a soft market, and translating regulatory requirements—like DORA’s cybersecurity mandates—into practical insurance solutions. Brokers also simplify complex claims processes, such as those for motor or business interruption coverage, and help overcome SME barriers like mistrust in insurers or confusion over policy value. By leveraging digital tools and market insights, brokers can provide tailored, cost-effective policies that align with your strategic goals.
Looking Ahead: The Next 12 Months
The commercial insurance market is set to evolve through July 2026, with key trends to watch:
- Continued Soft Market: Ongoing competition is likely to sustain lower rates and expanded coverage, offering cost-saving opportunities.
- Cyber Insurance Surge: DORA’s implementation will boost demand for cyber insurance, especially among SMEs, as compliance becomes critical.
- Climate-Driven Changes: Insurers will increasingly factor in climate and ESG risks, creating demand for specialized products in sectors like energy and property management.
- Digital Innovation: The rise of online platforms and AI-driven tools will streamline insurance purchasing, but businesses should ensure solutions comply with regulatory standards.
Key Considerations for Your Business
To navigate the 2025-2026 insurance landscape effectively, consider these insights:
- Review Coverage Regularly: Update policies annually to reflect inflation, supply chain risks, and regulatory changes like DORA, ensuring adequate protection.
- Understand Your Industry Risks: Assess sector-specific needs, such as cyber insurance for tech firms or public liability for retail and hospitality.
- Address SME Challenges: Overcome barriers like cost concerns, mistrust in insurers, or confusion over policy value by exploring bundled coverage options or seeking broker expertise.
- Leverage Broker Expertise: Work with brokers to secure competitive, customized policies and navigate complex claims or regulatory requirements.
- Explore New Options: Large enterprises can investigate captive insurance, while SMEs can leverage niche products tailored to their industries.
By staying informed and proactive, UK businesses can turn the dynamic insurance market into an opportunity to strengthen resilience and competitiveness.