Business Is Booming in the UK, but Insurance Cover Is Falling Behind

In Business, Protection by PCH Staff

The UK is experiencing a rapid rise in the number of people who are starting businesses in the country. In the past three years alone, more than two million people have started businesses and it’s a trend that shows no sign of slowing up, according to a recent survey by AXA.

In fact, the AXA figures reveal that a further 3.5 million people are planning to start businesses and become self-employed in the next 12 months.

However, while self-employment in the UK is surging forward, many business owners are choosing to operate uninsured – essentially not underwritten in any way – adding additional risk to their operations.

As many as six in 10 startups founded in the last three years are operating without any form of insurance cover. This figure does improve the older businesses get, with four in 10 firms at least having some insurance in place by the start of their fourth year in business. Nevertheless, a large chunk of companies are still left unprotected.

The biggest coverage gap can be seen in employers’ liability insurance, which is a legal requirement designed to cover workplace injuries and illnesses. Despite risking fines of up to £2,500 per day, 59% of businesses are taking on new staff without this necessary cover in place.

A quarter of businesses without cover said they haven’t even considered it, while 8% believe insurance is simply too expensive. A further 3% said they had forgotten to renew after a policy had lapsed.

Perhaps most worrying of all is the fact that 72% of businesses without cover said they were “too small” to need it.

But data from AXA suggests that these businesses who consider themselves too small to need to worry about insurance are actually misinformed.

“People are operating businesses without insurance because they think they are ‘too small’ or ‘too young’ for risk,” AXA Direct managing director, Gareth Howell, said. “We see no evidence in our claims figures that this is the case.

“We regularly settle injury claims on behalf of microbusinesses that top the million pound mark. That isn’t unusual these days at all, and the compensation is likely to increase following the change to the discount rate.”

AXA also found that while ‘trade specific’ claims, such as industrial deafness and repetitive strain injury, which can be anticipated and mitigated, have fallen significantly over the past three years, ‘non trade’ claims, which are harder to anticipate and mitigate, have more than doubled since 2014. These types of claim have the potential to affect every business and compensation for such claims often reaches hundreds of thousands of pounds.

When it comes to the least insured business section of the UK economy, freelancers are running the most risk, with just a quarter in their first three years of business having professional indemnity cover. Moreover, this figure does not seem to improve as businesses age, with just 35% of older freelance businesses having appropriate indemnity insurance. While not legally required, it indemnity cover is often promoted by professional associations as it can cover compensation costs relating to any alleged professional negligence.


When you are self-employed you are the business, if you aren’t insuring yourself then you aren’t insuring your business and vice versa, so if you aren’t planning to protect your business is it because you expect the business to fail?

Speak to PCG, we are totally independent and can give you the right options to protect both yourself and your business.

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