Trade credit insurers underwriting UK business risk have spent the past year adjusting to a pattern the Financial Conduct Authority has now put an official stamp on -- smaller companies, especially younger and thinly capitalised ones, are the group struggling hardest to get funding on workable terms.
The regulator's newly published review, FS26/2, set out to answer a narrower question than the one now shaping headlines: not whether SMEs face a finance problem, but whether FCA rules themselves are the cause of it. Its answer was no. Regulation, the review concluded, is not a major barrier to SME finance. What is a barrier, according to the same review, sits further upstream, in how the finance market itself functions, how much information smaller businesses can access about their options, and how much internal capability they have to act on it.
The FCA was specific that this isn't a uniform problem across every small business; the sharpest access issues cluster around micro-businesses and start-ups, firms without the trading history or asset base larger SMEs can point to.
Insurers working in trade credit could have told the FCA most of this already. Global exposure written through trade credit insurance hit roughly £3.07 trillion in 2024, and the UK segment alone generated close to $735 million in premium in 2025, a market Morningstar DBRS has described as maintaining solid profitability even as the wider corporate credit environment deteriorated. Three carriers, Allianz Trade, Atradius and Coface, write around 65% of that global capacity between them, and none pulled back from the UK market through the recent period of subdued growth, elevated inflation and rate holds by the Bank of England's Monetary Policy Committee.
What did shift was underwriting discipline. Rather than repricing broadly, carriers held rates roughly steady and concentrated instead on portfolio quality, a distinction that matters for exactly the kind of business the FCA's review flags as most exposed. A start-up or micro-enterprise applying for credit insurance today is being assessed by underwriters already alert to the fragility the regulator has just confirmed in policy terms.
Marsh's own Trade Credit Report found four in five manufacturing businesses said growing the business had become harder in 2025 than the year before, with credit risk named as a central constraint rather than a peripheral one.
The same research found the vast majority of manufacturers now outsource debt collection entirely, and nearly all of those report collection costs rising over the past year, a squeeze that compounds whatever difficulty a business already has accessing finance in the first place.
Businesses caught in that bind are increasingly using insurer-backed credit limits not just to protect against bad debt after the fact, but to unlock larger and more flexible supplier terms up front, effectively substituting an insurance relationship for some of the collateral a bank might otherwise demand.
Separate research from Premium Credit has tracked how SMEs are adjusting the way they pay for cover itself under the same pressure. A growing share of small businesses have shifted from paying insurance premiums in a single lump sum to spreading the cost monthly, a change Premium Credit's own commentary has linked directly to persistent late payment problems eating into working capital.
That's a smaller, more granular version of the same access-to-finance theme the FCA's review addresses at a national policy level: businesses without spare cash reserves are managing every financial obligation, credit facilities and insurance premiums alike, on a more fragmented, month-to-month basis than they would in a healthier cash flow environment.
However, none of this means brokers should treat the FCA's review as an insurance story dressed up as a finance one. It isn't. But the population the review is describing, thinly capitalised, information-poor, capability-constrained SMEs, overlaps heavily with the population insurers and brokers already struggle to serve well, for identical reasons.
A micro-business that can't easily work out which lender suits it is frequently the same business that hasn't reviewed its cover in years, or doesn't know its public liability policy excludes exactly the risk that would put it out of business. Trade credit insurance sits at a useful intersection of the two problems: it's a product that directly addresses a financing gap (protecting receivables when a customer doesn't pay) while also being one of the more under-penetrated covers among exactly the SME segment the FCA says needs the most help.
The FCA's conclusion that regulation isn't the obstacle effectively hands responsibility back to the market to fix what it can. Trade credit insurers have already been doing some of that work by tightening underwriting rather than withdrawing capacity, and premium finance providers have adapted payment structures to match strained cash flow.
For brokers, the review is less a call to action on regulation and more confirmation that the smallest, newest clients in a book of business are the ones worth the most proactive attention right now, not because the rules changed, but because the underlying financial position the FCA just described in a policy paper is one insurers have been pricing around for months.
