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Business Recovery & Insolvency

Insolvency share increases for middle class suburbanites in 2011

By CreditMan Friday, February 3, 2012

New analysis from Experian®, the global information services company, today revealed that although insolvency continues to be most frequent amongst welfare dependent groups, some middle class families saw their share of insolvencies increase in 2011. Meanwhile, the rate of insolvencies amongst young professionals fell over the last 12 months.

Demographic insight

While figures published today by the Insolvency Service* showed there were 11.3% fewer personal insolvencies in 2011 compared with 2010, Experian’s demographic analysis using its Mosaic classification shows that this decrease was experienced by some consumer groups more than others.
Experian’s analysis showed that the Suburban Mindsets group saw the biggest increase in their share of UK insolvencies in 2011, rising by a total of 56 basis points. This demographic, which includes mostly married or middle aged people, bringing up children in family houses accounted for 10.93 per cent of UK personal insolvencies in 2011, up from 10.37 per cent in 2010.

Young people saw the biggest improvement in their share of personal insolvencies in the last 12 months. The Liberal Opinions group, consisting of young, professional and well educated people experienced the biggest decrease in insolvencies, from 6.14 per cent of insolvencies in 2010 to just 5.40 per cent in 2011. Mosaic’s Upper Floor Living group, consisting of young people on limited incomes living in council accommodation, saw its share fall from 5.90 per cent in 2010 to 5.17 per cent in 2011.

Experian’s data reveals that the largest share of UK insolvencies continues to be in the Ex-Council Community group - typically those living on council estates where a large proportion of residents have exercised their right to buy. This group, which makes up 9.26 per cent of the UK adult population, accounted for a higher share of UK insolvencies in 2011 compared to 2010 with this demographic accounting for 14.54 per cent of insolvencies, an increase of 41 basis points.

Geographical analysis

Despite overall decreases in insolvencies across the UK, Experian’s analysis shows that some regions and towns continued to struggle.
Amongst UK towns, Birmingham saw the biggest increase in personal insolvencies rising by six per cent, with 30 in every 10,000 households experiencing insolvency in 2011, up from 29 in 2010. Middlesbrough and Stirling also experienced rising levels of personal insolvencies, up by five per cent and two per cent respectively.

Richmond in South London experienced the UK’s biggest drop of insolvencies in 2011 where just seven people in every 10,000 households became insolvent, 62 per cent less than last year. Overall London remained one of the least affected regions with four in every 10,000 households experiencing insolvency in 2011 compared to five in every 10,000 in 2010.

Simon Waller, Head of Customer Management and Collections for Experian UK & Ireland, commented: “Whilst it is encouraging to see that personal insolvencies are declining throughout the UK, there are still pockets of society where financial stress has increased in 2011. Redundancy and relationship breakdown are typically the main reasons for why people to experience serious financial difficulties.

Lenders that use data and analytics to better understand the specific circumstances of their individual customers are best placed to assess risk and to manage their customer relationships accordingly.”