Research shows insurance sector is not so bleak.
New research into business insolvencies makes surprisingly good reading for the insurance sector. A study carried out by Experian showed that a total of 16,591 UK businesses failed in the first nine months of 2008 – this represented a 22% increase on the same period in 2007.
The sector to suffer the largest amount of casualties was the business services sector – a total of 3,550 companies in this industry became insolvent in the first nine months of this year. The biggest year on year increase in insolvencies was in the property sector – the number of firms that went out of business by the end of September this year stood at 891, a massive increase of 130% on the total for the first nine months of 2007.
But while the total number of UK insolvencies in 2008 has increased by more than a fifth compared to the same period last year, the number of insolvencies in the insurance sector alone has increased by only three per cent. So, while more insurance companies are going out of business this year compared to last year, the rate of increase is much lower than that for the UK economy as a whole. A total of 35 insurance firms went out of business in the first nine months of 2008, compared to a total of 34 insolvencies in the same period last year.
What are the lessons businesses can learn from all of this? Experian has produced a checklist aimed at helping businesses avoid insolvency. The top tips include checking the payment trends of existing and potential customers – evidence of bills being settled later and later each month indicates a deteriorating cash position. Businesses are also advised to look out for late filing of annual returns and financial accounts – firms with poor trading results tend to delay submitting their accounts as long as possible.
If you’re working in the property sector, where insolvencies are soaring, the future is looking pretty bleak, but, for the time being at least, things aren’t quite as gloomy in the insurance world.
