The future of cyber-intermediaries has been called into question after Misys axed Screentrade and Theformula last week, partly blaming a lack of consumer interest.
The software giant was unwilling to divulge conversion rates for Screentrade, which sold motor, home and travel insurance, but had been in talks over the past six months with more than 50 possible partners to share development costs.
Around 120 staff are likely to lose their jobs, although some may be re-employed in other parts of the company.
MIT, Misys's consumer financial services arm, lost £19m in the year to the end of March. It will cost Misys £10m to close the operation down.
Conversion rates from online quotes in financial services are low – typically around 1% to 7% – according to Datamonitor.
Commentators on the online financial services market had long said that many companies would fall by the wayside.
Ross Hall, of consultants Garol, said the closure of Screentrade was part of a global trend, with sites in the US also in trouble. In the UK, Rapidinsure soon perished, Inspop never really got off the ground and some of Quote and Buy's staff recently took “temporary” pay cuts.
Screentrade was launched in November 1997 and was the first online general insurance intermediary. It said it had 40,000 policy holders at the time of the closure.
Theformula had been due to launch this year and to offer customers a basket of financial products from a range of providers.
Misys chairman Kevin Lomax said: “Although we established a strong foothold in the marketplace with Screentrade, slower than anticipated consumer adoption of the internet for purchasing a broader range of financial services products has resulted in ongoing losses at a level which can no longer be justified by potential returns.”
Misys is looking for a buyer for the Screentrade name and book of business, and a spokesman said there had already been more than ten expressions of interest from insurance companies and Screentrade's current rivals.
He added that the closure of Screentrade was “a shame for impartiality. Now you're left with a lot of providers and their own sites”.
He said the closure of the site was a warning shot across the bows for anyone in business -to-consumer that firms needed a lot of cash to survive.
Meanwhile, Misys has made two acquisitions. Last week, it paid £75m for independent financial services company DBS Management. DBS owns the AssureWeb portal which links financial advisers with pension, life assurers and other products.
This week, it also paid £287m for US healthcare systems company Sunquest.
