The UK government’s Autumn Budget, delivered by Chancellor Rachel Reeves, set out a package of measures aimed at small and medium-sized enterprises, including extra funding for apprenticeships and a renewed focus on workforce skills.
While positioned as support for SMEs and labour market development, insurers say the impact will hinge on how firms manage rising costs and risk exposures.
Among the headline measures, the Budget confirmed additional investment to widen access to apprenticeships, particularly for younger workers in smaller firms. Market participants note this could help ease recruitment challenges and build a future talent pipeline in sectors facing persistent skills shortages.
Craig Morgan (pictured above), of SJL Insurance Services, said the new skills measures are a constructive step for employers operating in a tight labour market. “The Budget includes welcome commitments to free apprenticeships for under-25s and broader skills-investment for SMEs,” he said, adding that these programmes may support longer-term workforce planning.
Recent research from Aviva indicates that many SME leaders already juggle competing demands, with substantial time devoted to financial planning, managing staff and dealing with regulatory and administrative tasks.
Arranging insurance and handling IT and cyber security are among the more time-consuming activities, raising concerns that some businesses may delay policy reviews or risk assessments even as their exposures evolve.
Morgan also warned that many small businesses are having to navigate higher operating costs that feed directly into their insurance needs. “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,” Morgan said.
The Chancellor confirmed that the National Living Wage will rise to £12.71 per hour from April 2026, increasing staffing costs for labour-intensive sectors. Some insurers expect this to have knock-on effects for employers’ liability exposure, particularly if firms run with leaner teams or defer investment in health and safety.
Insurers are also highlighting rising underinsurance risk, especially for commercial property and business interruption cover. Inflation in construction materials, labour and repair costs means sums insured based on outdated rebuild values may no longer reflect current replacement costs.
Morgan described underinsurance as a growing issue for the SME segment. “Underinsurance is one of the biggest growing risks for SMEs and today’s Budget doesn’t address this directly,” he said, noting that some firms have not revisited valuations “in years” and may only discover gaps after a claim.
Despite budgetary pressures, Aviva’s survey found strong SME appetite for insurance products that incorporate wider employee support, with 92% of businesses saying they would pay higher premiums for wellbeing services and some indicating they would pay up to 15% more.
Market observers say this points to growing interest in policies that combine traditional risk transfer with people-focused benefits, provided cover and value are clearly articulated.
Sector specialists argue that the net effect of the Autumn Budget on SMEs will depend on how firms respond to these shifting pressures. Regular coverage reviews, updated property valuations and more structured risk-management practices are being cited as key tools to help businesses balance new support measures with rising operational and insurance-related costs.
