Four-fifths of small business owners (81%) shop around every year for commercial insurance, but ‘switching friction’ means only 52% change insurer.
A survey of SME business owners by Consumer Intelligence found that 19% renewed their insurance without shopping around.
Consumer Intelligence says its study shows small business owners are sensitive to the price of cover but that it is not their only consideration when buying insurance. This ‘switching friction’ leads to advantages for the existing insurers of SME businesses, Consumer Intelligence says.
When business customers did switch insurer, Consumer Intelligence says this tends to be because they can get cheaper rates for the same or better cover, had a poor claims experience with their previous insurer or had changed business circumstances requiring different coverage.
Other reasons for switching included cashback incentives and recommendations from peers. Most SMEs stayed with one insurer for between one and three years.
Most small businesses were satisfied (satisfaction rate of 7.6/10) with their insurance arrangement, Consumer Intelligence found. This, coupled with switching rates, suggests an overall healthy business insurance market, but with limited differentiation between insurers and where price remains the main competitive tool.
SME business owners tend to buy cover from price comparison websites, Consumer Intelligence found, but also use other channels such as direct insurer websites, brokers, telephone quotations and cashback websites.
Consumer Intelligence recommends that insurers reduce switching friction by improving how they acquire new customers. Other immediate recommendations include narrowing the gap between new business and renewal rates and employing different strategies for active SME insurance shoppers versus loyal customers not interested in shopping around.
In the medium term, Consumer Intelligence suggests insurers build emotional connections with their customers, moving their view of cover away from one focused on price.
Insurers should also consider specialising in high-value segments and create barriers to switching such as rewards for loyalty and multi-product bundles, it said.
In the long term, insurers should shift their focus from acquiring customers to keeping them, improve their claims experiences and embed insurance within business banking, accounting or operational platforms.
Ian Hughes, chief executive of Consumer Intelligence, said:
“The UK SME business insurance market operates as a mature, price-driven marketplace where shopping has become habitual but switching remains selective. Success requires balancing competitive pricing with genuine differentiation through service, expertise, or ecosystem integration.
“The data reveals a market ripe for disruption—not through price alone, but through fundamentally reimagining the value proposition for time-pressed SME owners who currently view insurance as a grudge purchase rather than a business enabler.”
The businesses surveyed by Consumer Intelligence were comprised of construction (13%), information and communication (12%), wholesale and retail trade (10%), financial and insurance (7%) and other services (7%).
