The Lloyd's Market Association (LMA) has published a new model wording for property and business interruption insurance aimed at small and medium-sized enterprises. The wording was announced on June 30.
The LMA said the wording was developed in response to market demand. Members requested a comparable wording for SME risks following the publication of the LMA's Consumer Household Insurance Policy.
The policy provides cover for damage to insured property and associated business interruption losses. It includes optional extensions, such as cover for business interruption resulting from property damage at the premises of a direct customer or supplier.
Demand for SME-relevant property cover has been growing. The number of active UK property management businesses is rising by 2.8% a year, according to separate analysis from property management specialist Rushbrook & Rathbone. Smaller operators are often less familiar with complex policy wordings, the analysis found.
The wording was drafted using consumer-friendly language, the LMA said, and is intended to align with the Financial Conduct Authority's (FCA) Consumer Duty requirements.
The LMA has separately published guidance defining how SME status applies under the FCA's simplified rules. The guidance sets an SME watershed aligned with Financial Ombudsman Service eligibility criteria. That generally covers businesses with turnover below £6.5m, fewer than 50 employees, or a balance sheet total below £5m.
Development of the wording was led by the LMA's UK/International Commercial Property & Household Business Panel. The SME wording was first flagged as a priority in 2024. The LMA outlined plans that year to introduce a property and business interruption policy for UK SMEs, alongside a revised personal accident wording.
David Powell, head of technical underwriting at the LMA, said the wording supports the association's focus on clear and compliant documentation. "By focusing on plain, consumer-friendly language and ensuring alignment with regulatory expectations, we are helping our members deliver better outcomes for SME clients while maintaining the technical robustness the market expects," he said.
The LMA's plain-language approach draws on earlier work assessing policy readability. Research conducted with the University of Nottingham for the LMA's home insurance policy found most wordings required an undergraduate or postgraduate reading ability. One in seven adults in England has a reading age of 11 years or below, the research found.
The new wording is available on the Lloyd's Wordings Repository.
