BusinessBusiness RecoveryInsurance rises will push up insolvencies, says Wilkins Kennedy

Insurance rises will push up insolvencies, says Wilkins Kennedy

Accountancy firm Wilkins Kennedy has thrown its weight behind the idea that company insolvencies will rise due to mounting insurance costs, as revealed in Accountancy Age yesterday.

According to the mid-tier firm, the chances of companies becoming insolvent are increasing as bosses decide not to renew non-compulsory insurance to compensate for the huge increase in compulsory insurance.

Although the firm says there will be relatively few companies that will not renew compulsory insurance, such as employers liability, companies will try to compensate for the increased premiums by not getting coverage for risks such as business interruption, legal expenses, fire and theft.

Head of corporate recovery Colin Wiseman said: ‘Without insurance, an event such as damage to a company’s inventory, can easily push it into insolvency.

He added he was concerned that companies that haven’t suffered losses due to catastrophes in the past will not take out insurance and will attempt to self-insure, which is okay for the FTSE-100 but could ruin a small business.

According to Wiseman, the problem does not only concern company owners, but will affect anyone who has a stake in the business, such as creditors and managers.

Yesterday Accountancy Age revealed experts believe insolvencies will rise as companies opt out of renewing their insurance cover due to rising rates or because they are deemed too high a risk and refused cover by insurance companies.

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