London, UK (10 November 2025): Global specialist insurer, Hiscox, has today published its first Global Protection Gap Report, which shines a light on the issue of underinsurance among SMEs. Despite a backdrop of rapidly changing risks, the report suggests that three out of four (74%) small businesses around the world are unnecessarily exposed to risk as a result of being underinsured*.
Small businesses are a crucial economic lifeblood, powering 50%** of the global economy, yet this new research – based on responses from 6,250 small business owners across the UK, USA, France, Germany, Spain and Portugal – reveals that:
- Risk is top of mind for small business owners: 92% of business owners we spoke to said they are kept up at night by possible threats to their business, with their top three insurable concerns being theft or damage to property (34%), cyber attacks (33%) and workplace issues and injuries (32%).
- Despite this, many lack critical cover: 55% of SMEs may have a protection gap due to not purchasing core coverages such as professional indemnity, public liability, property and employers liability. This leaves small businesses exposed to potentially costly claims relating to bodily injury, property damage, lawsuits from clients and employee claims of mistreatment – risks which we also know small business owners consider to be among their top concerns.
- Lack of understanding is leaving many businesses exposed: Almost two-thirds of small business owners (65%) surveyed couldn’t accurately describe what public liability insurance covers. This rises to 77% for cyber insurance and 80% for professional indemnity cover.
- Too many are taking a ‘set it and forget it’ approach to insurance: Around a third of small business owners surveyed haven’t reviewed their insurance policies in the last three years, meaning any growth in revenue, headcount, product offering or distribution during that time could leave them exposed to new or increased risk.
- Delays leave the majority exposed at a critical time: Almost 1-in-4 small business owners (24%) surveyed said they didn’t buy insurance for their business until they made a profit, while 23% waited until they were working on their business full-time before putting cover in place.
Joanne Musselle, Hiscox’s Group Chief Underwriting Officer, said: “As the business environment continues to evolve at pace, so too do the challenges that can impact the fundamental wellbeing of a small business. From cyber threats and supply chain disruption, to environmental events and shifting regulatory requirements, the landscape is shifting fast and it’s easy for it to feel overwhelming. The intention of this report is to help SMEs focus on some of those risks, and what they can do to minimise their exposure, and to help give them easier access to the resources that are out there to help and support them.”
The lack of understanding among SMEs as to what business insurance protects them against is leaving too many businesses potentially vulnerable to avoidable financial and operational shocks. Professional indemnity is the most commonly misunderstood among small business owners, and yet it is critical to protecting your business if you are sued for negligently performing your services – even if you haven’t made a mistake. Cyber insurance is similarly misunderstood by SMEs, which could lead to resilience blind spots for risks including data breaches, security failures, financial scams, or cyber attacks.
Joanne added: “Small business owners invest years of hard work, resources and passion into building their dream business. They wear lots of different hats while they’re doing it; and not everyone has the capacity to be a risk manager as well. That’s why we’re sharing the results of this research, and our top tips for small business owners to help them fill that gap. Of course insurance has a role to play as a critical safety net, but it’s not a substitute for proactive risk management, and we want to do what we can to help make that process easier.”
Top tips for small businesses
1. Understand your personal risk landscape: Small businesses face a multitude of risks, so documenting some of that thinking via a risk audit or in a risk management plan can help. This should reflect all the things that could go wrong, both in your sector and with your daily operations – so, how you interact with customers, any supply chain dependencies you may have, and your regulatory exposures. Some of the common small business insurance claims we typically see include loss or theft of business equipment and slips and trips on business premises. But by identifying all your potential operational, financial, legal, reputational and cyber risks, taking early action to mitigate these risks, and putting in place contingency procedures, you can relatively quickly build your resilience to key risks.
2. Stay updated on the latest developments affecting your industry and the broader risk environment: Lots of other businesses will be facing the same challenges as you, so find ways to share knowledge and gain fresh insights by engaging with trusted advisory sources, participating in relevant industry forums, and monitoring relevant regulatory changes.
3. Reassess your insurance needs regularly: Not every business needs every type of insurance product. We recommend reviewing your insurance every year or sooner if your business grows by 20% in revenue, headcount, or operations to make sure your cover has evolved at the same pace as your business. This will help to avoid not only underinsurance but also paying for cover you no longer need. If you’re unsure, contact an insurance broker who can make sure you get just the insurance you need for your specific circumstances, or we can guide you through the types of cover a business of your size and type typically needs. And don’t forget to consider your policy limits too – most small businesses cap their insurance at £/$/€1 million, and while this might seem like a lot, it could be quickly reached in the event of extensive business property damage, or legal fees for court proceedings, so make sure you consider your worst-case scenarios carefully.
ENDS
For further information please contact:
Lucy Hensher, Head of External Communications: [email protected] +44 (0)7824 996 370
Carmel McCarthy, Global Media Relations Lead: [email protected] +44 (0)7769 280903
Notes to editors
*Methodology
Research for the Hiscox Global Protection Gap Report was conducted by Wakefield Research between 18 June and 30 June 2025, using an email invitation and an online survey. The findings are based on responses from 6,250 small business owners, which for the purposes of this research we defined as businesses with 1-50 employees in the UK, USA, France, Germany, Spain and Portugal. The data comprises of 2,000 US respondents, 250 respondents in Portugal, and 1000 respondents from each of the other markets surveyed.
This data was then used to calculate whether or not these businesses were underinsured. This was calculated by testing each individual response against seven underinsurance criteria. These criteria are based on the specific insurance needs in each market and determine whether there is a high likelihood that the respondent is underinsured. Whilst exact coverage needs cannot be determined without an in-depth risk review, this approach provides an overall level of underinsurance that we can have high confidence in. Example criteria are:
- Respondents who have customers visit them at their place of work (e.g. office or shop) should purchase public/general liability insurance.
Respondents in industries where professional advice is included in the service should purchase professional indemnity/liability insurance.
** According to United Nations data: https://www.un.org/en/observances/micro-small-medium-businesses-day
About The Hiscox Group
Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle.
The Hiscox Group employs over 3,000 people in 13 countries and has customers worldwide. Through the retail businesses in the USA, UK and Europe, we offer a range of specialist insurance products in commercial and personal lines. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re & ILS.
Hiscox has a deep understanding of small business insurance, having served the specialist requirements of SMEs across a variety of sectors for over 20 years. This includes understanding the specific needs of small businesses operating in areas including technology, consultancy and professional services, and marketing, media and the creative industries.
Our values define our business, with a focus on people, courage, ownership and integrity. We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit www.hiscoxgroup.com.
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