Budget 2025: Maybe It’s Time For Business to Consider Underinsurance Risk?

Let’s have a look at the potential impact of the Budget on UK business;

The UK Government’s Autumn Budget, delivered yesterday by Chancellor Rachel Reeves, introduced new measures aimed at supporting small businesses, including additional investment for apprenticeships and a focus on workforce skills.

While positioned as a boost for SMEs, insurance experts warn that rising operational costs and growing risk exposures could offset some of these benefits.

Reacting to the latest Budget announcements, Craig Morgan from SJL Insurance Services said:

“The Budget includes welcome commitments to free apprenticeships for under-25s and broader skills-investment for SMEs. But many small businesses still face increasing risk exposure, from rising wage bills and operational costs to inflation pushing up rebuild values. These pressures can all translate into higher insurance premiums if firms aren’t properly prepared.”

The Chancellor confirmed that the National Living Wage will rise to £12.71 per hour from April 2026, increasing staffing costs across sectors that rely heavily on labour. For many SMEs, this may widen employers’ liability exposure, particularly as stretched teams and cost pressures heighten workplace risk.

At the same time, ongoing inflation in building materials and repair costs is increasing the likelihood that businesses may be underinsured. Commercial properties with rebuild values that no longer match today’s market conditions could face significant financial shortfalls in the event of a claim.

Morgan added:

“Underinsurance is one of the biggest growing risks for SMEs and today’s Budget doesn’t address this directly. Many businesses haven’t reviewed their rebuild valuations in years, and rising costs mean they could be unintentionally exposing themselves to major financial gaps. The combination of increased wage costs, inflation and supply-chain pressures means SMEs need clearer support and guidance to protect their operations.”

While the government emphasises the Budget as a driver of growth and stronger skills, experts say the impact on small businesses will depend on how effectively they manage rising risk exposure. Ensuring adequate insurance coverage, updating valuations and investing in risk management will be essential to offset the financial pressures highlighted in this year’s announcements.