Small businesses are being urged to prepare for higher insurance premiums next year as rising repair costs, inflation and increased claims continue to drive prices up across the commercial insurance market. According to the 2025 Premium Credit Insurance Index, 51% of SMEs say their business insurance costs have increased over the past 12 months and 10% described the rise as “dramatic”.

An expert from insurance broker SJL says many firms could face further cost pressure going into 2026 after announcements in the Autumn Budget which may have an impact.

Furthermore, the same 2025 Premium Credit data shows that 54% of SMEs are using credit to pay for their business insurance premiums, underscoring the cash-flow strain many are already under.

The warning comes in the wake of the chancellor’s announcements, which introduced several measures impacting operational costs, leaving many Small and medium businesses facing fresh financial pressure and tighter margins. SJL says that with overall business expenses still rising, insurance is an area where firms may face unexpected increases at renewal unless they act early. On average, SMEs borrowing to pay premiums took loans of £1,180, almost 10% higher than the previous year’s average of £1,080.

Craig Morgan from SJL, said:

“Premiums have been rising steadily across several key business sectors. With material costs, labour costs and claims inflation all still elevated, many SMEs will see increases at renewal unless they proactively manage their risk.”

Craig then went on to share five steps small businesses can take immediately to help control insurance costs:

1. Review policies annually instead of auto-renewing

Many small businesses are paying more than necessary because their policies simply roll over each year. Reviewing assets, staffing and operational risks annually allows businesses to remove unnecessary add-ons and adjust limits to current needs.

Regular reviews prevent businesses from paying for cover they no longer require and help ensure policies accurately reflect current operations.

2. Strengthen security to reduce theft and damage claims

Improving physical security such as CCTV, upgraded locks, alarms, lighting, or tracking for tools and vehicles can directly reduce premiums because insurers assess risk based on the likelihood of theft or damage. Sectors facing a rise in tool theft are urged to prioritise this.

Enhanced security lowers the chance of a claim, and insurers typically reward businesses that take clear steps to reduce risk.

3. Increase voluntary excess (only if financially safe)

Raising the excess can lower premiums, but only as long as you can comfortably cover that excess should a claim arise.

“It’s a cost-saving strategy, not a shortcut, so only increase it if cash flow allows,” Craig says.

Businesses choosing this route should treat it as a budgeting decision, ensuring they have funds available if a claim does occur.

4. Invest in staff training and safety compliance

Claims frequency is a major driver of premium increases. Better training whether in health and safety, cyber awareness, manual handling or safe driving reduces incidents and helps keep future premiums down.

Improving employee skills and safety awareness lowers the likelihood of accidents, resulting in fewer claims and more stable renewal costs.

5. Use a broker to compare insurers and negotiate

With premiums fluctuating across different sectors, it’s vital for SMEs to shop around. Brokers can access a wide range of insurers, negotiate on behalf of clients and identify sector-specific cover that may be more competitively priced.

A broker’s market knowledge can highlight savings and ensure businesses avoid paying for unnecessary or duplicated cover.

Craig concluded saying: “The Autumn Budget has provided some clarity for the year ahead, but it has not eased the wider cost pressures many SMEs continue to face. Reviewing insurance early can help avoid bill shock when renewal dates come around.”