CGU has stopped piloting Policy Master's (PM) digital television application.
The insurer says that no deal has been struck between the two firms for the full implementation of an interactive television system to sell general insurance.
CGU spokesman Ian Frater said: "We have run with it as far as we needed to. We have not made a final decision on whether we want to go down the route of digital television. We have certainly not said we are going to do it. We have looked at it, we have tested it, and now it is a matter of whether we want to go down that route. As yet the decision has not been taken.
"But the story that we had signed deals is wrong. We have not signed a deal and we have not taken a contract. We are not sure that the demand for digital television is there yet, but it also a matter being ready for that demand when it comes and if digital television does take off, I'm sure we will be one of the first insurers to adopt it."
Policy Master refused to discuss the project, although its previous forecast that a digital television insurance application would be available to the public in early 2000 now looks unlikely.
It is believed that CGU is the only insurer to have piloted a digital television application.