Delta Insurance flags rising risks for SMEs

Delta Insurance has warned that increasing regulatory oversight, rising operational costs, and persistent economic headwinds have elevated the risk landscape for smaller businesses.

The insurer noted that SMEs often face tighter cashflow constraints and lack the internal resources needed to manage legal disputes or respond to compliance breaches. Without sufficient risk protections in place, these challenges can lead to financial losses that are difficult to absorb.

Insurance professionals are encouraged to help their SME clients review their risk exposure and consider management liability insurance as part of their broader business continuity planning.

Liability insurance designed for SME operations

Management liability insurance bundles several coverage areas under a single policy. It is specifically designed to safeguard business leaders and their organisations against risks arising from decision-making, governance, and internal controls.

Delta outlined the following key coverage areas:

• Directors and officers (D&O) liability offers protection to company directors and officers who could face personal liability for decisions resulting in legal action, including allegations of mismanagement or regulatory non-compliance.
• Crime coverage protects businesses against financial losses resulting from employee theft, fraudulent activity, or social engineering scams, which continue to impact organisations of all sizes.
• Employment practices liability provides coverage for claims related to workplace disputes such as wrongful termination, discrimination, or harassment, including legal defence and settlement costs.
• Cyber liability covers the financial consequences of cyberattacks, including data breaches and ransomware events, offering support for data recovery, regulatory compliance, and public relations response.

“Risks such as contractual disputes, liquidity issues, and loss of critical contracts can severely strain resources and can be a distraction for the leadership team. These vulnerabilities highlight the need for comprehensive protection tailored to the unique risks faced by SMEs,” Delta said.

Changing market conditions emphasise risk readiness

Broader industry research indicates a shift in liability trends. The Global Insurance Law Connect (GILC) “D&O Global Trends 2025” report identified growing litigation risk, enhanced regulatory scrutiny, and environmental, social, and governance (ESG) issues as primary concerns shaping underwriting decisions. The study also found a notable increase in claims being upheld against directors and officers.

Cybersecurity continues to dominate as a key area of concern. The Allianz Risk Barometer 2025 placed cyber incidents, including data breaches and IT disruptions, as the leading business risk for 2025. Business interruption and climate-related events also featured prominently among global concerns.

Local experts, including risk consultancy Marsh and law firm MinterEllisonRuddWatts, have advised SMEs to take a more integrated approach to risk management. This includes combining insurance with staff training and improved incident response strategies.