Public Sector organisations are facing a rapidly evolving risk environment, with pressures ranging from cyber liability and climate change to financial strain and a decline in public confidence in institutions growing distrust in institutions. Our annual UK state of the market report explores these challenges in depth, highlighting how insurance market conditions are softening, yet risk complexity continues to rise.
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Public Sector organisations are facing a rapidly evolving risk environment, with pressures ranging from cyber liability and climate change to financial strain and a decline in public confidence in institutions growing distrust in institutions. Our annual UK state of the market report explores these challenges in depth, highlighting how insurance market conditions are softening, yet risk complexity continues to rise.

The report identifies several key trends shaping the market:

  • Cyber threats are intensifying, with over 60% of large public bodies reporting incidents in 20251. AI-driven attacks are expected to amplify this exposure.
  • Climate change continues to escalate risk, leaving UK homes and businesses increasingly vulnerable to flooding, heatwaves and extreme weather.
  • Public trust in institutions has eroded, with confidence in news sources falling from 51% to 33% in under a decade2, complicating governance and liability exposures.
  • Structural shifts, including local government reorganisation, are reshaping risk ownership, funding, and accountability.

Against this backdrop, our specialists stress the importance of embedding enterprise risk management, recalibrating coverage adequacy, and developing adaptive strategies. By acting decisively today, public bodies can strengthen resilience and help to prepare for an uncertain future.

READ REPORT

Sources

1 Burnett, Steven. UK Insurance Industry Statistics 2025: Trends, Data, and Market Analysis, CoinLaw, 27 Jun 2025.
2 Chronic Risks Analysis, GOV.UK, 08 Jul 2025. PDF file.

Disclaimer

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

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