23.09.25

How SMEs Can Reduce Insurance Expenses

Insurance premiums can be a significant recurring operational cost, especially for small – and medium-sized enterprises (SMEs). Core policies – such as public liability, property, and motor insurance – are essential for risk mitigation, yet their cumulative cost can strain smaller companies with limited resources. To help reduce insurance expenses, businesses must navigate shifting market dynamics, including inflationary pressures, labour shortages, and the increasing frequency of extreme weather events, all of which can contribute to rising premiums and further stretch operational budgets.

However, cutting costs by reducing insurance cover can leave businesses dangerously exposed. A single incident – such as a legal claim, motor accident or property loss – can result in severe financial consequences or even threaten an SME’s viability. On the other hand, acquiring robust insurance cover at the right price can financially protect SMEs from unexpected events and help them recover more quickly from setbacks.

As such, SMEs should consider ways to reduce their insurance expenses without compromising the cover they need to survive and thrive.

Ways to Reduce Business Insurance Costs

SMEs should consider the following strategies to manage insurance expenses effectively and reduce financial risk:

• Bundle policies. SMEs can consider the merits of bundling essential cover types (e.g. public liability, property and business interruption insurance) into one single, tailored package. Bundling policies simplifies insurance management and may qualify SMEs for discounted premiums.
• Increase the excess. Raising the excess can lower premiums, improve cash flow and allow for the redirection of funds to other business priorities. However, SMEs should ensure the excess is affordable to avoid financial strain when filing a claim. Paying premiums annually rather than monthly may also reduce costs, as interest may be charged when paying by instalments.
• Implement robust safety measures. Insurers may offer discounts to businesses with strong safety records. SMEs should develop a comprehensive safety programme, including regular risk assessments, disaster preparedness measures and robust staff training. A strong safety culture and clearly defined safety procedures can help reduce accidents and claims resulting in long-term saving insurance on premiums.
• Enhance security systems. SMEs should review physical security – such as alarms, CCTV, and secure locks – and strengthen cyber-security through firewalls, antivirus software, and employee training. Strong security measures may qualify SMEs for lower premiums.
• Maintain continuous and appropriate cover. SMEs should review their insurance regularly to ensure it aligns with current operations and risk levels. Implementing safer practices, reducing claims, or discontinuing high-risk services can improve a company’s risk profile and lower premiums. Avoiding gaps in cover is also crucial, as lapses may increase future costs or limit insurer options.
• Maintain a good credit history. SMEs should take steps to maintain good financial standing, as strong credit scores are associated with lower risk and can lead to reduced premiums across key policy types. 

Consult With an Insurance Broker

Managing insurance costs is a critical component of sound business strategy. SMEs can optimise their insurance spend without compromising protection by proactively reviewing cover, implementing risk-reduction measures, and bundling policies. For ultimate protection, SMEs should work with a broker to navigate policy options and find the best insurance cover for their unique circumstances. Contact us today to find out more.

Information provided by Zywave and contributed to by  Harrison Law, (Cert CII) Head of Commercial & Private Clients, Cox Mahon Ltd.