July saw a 140% year on year increase in the number of insurance company insolvencies, according to Experian.
The latest Insolvency Index from Experian shows that 36 insurance companies folded in July 2011, a 140% rise compared to the same month last year. The proportion of insurance insolvencies was 0.32% of the total sector compared to 0.13% in July 2010.
The index also shows that the financial strength of insurance companies slipped marginally from 83.98 to 83.87- still above par for businesses across the economy.
Across all sectors, the index records a 13% drop in the number of large firm - companies employing 501 or more employees - insolvencies during July 2011 compared to July 2010.
Across all companies, the national rate of insolvencies increased with 0.10% of firms failing in July 2011, up from 0.08 per cent in July 2010.
Businesses employing 51-100 people experienced the biggest annual increase in insolvencies, with the proportion of businesses failing growing from 0.15% in July 2010 to 0.22% in July this year. Firms with 11-25 employees saw the highest percentage of businesses fail in July 2011 (0.26 per cent of the population).
The overall financial strength score of businesses in the UK dropped from 80.93 in July 2010 to 79.84 in July this year, according to the indec However, large companies saw their financial strength score improve from 84.20 to 86.13.
The insolvency rate is calculated by comparing the number of businesses that failed with the total business population in Great Britain.
The north west of England saw 0.14% of its firms fail, more than any other region. Scotland maintained the lowest insolvency rate with 0.07%, while Yorkshire maintained its July 2010 insolvency rate of 0.13%.
Experian Business Information Services managing director Max Firth said: “When a large company becomes insolvent it can create a domino effect in the surrounding economy, so the improvement in insolvency rates with firms with more than 500 employees is good news.
“However, this doesn’t lessen the need for all organisations, regardless of their size or sector, to be mindful of the risks their customers, suppliers and partners can expose them to. It is vital that businesses fully understand the financial strength of those they do business with by checking their commercial credit score and late payment trends.”
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