Directors of New Millennium Technologies (NMT) tried to launch an MBO to buy the company.
But the bid failed and all directors were made redundant the week before Christmas, administrator Deloitte & Touche told Insurance Times.
Potential buyers or investors were still being encouraged to come forward, but members of staff were told to go home on 20 December.
This was the deadline date the administrator had given for any investor to replace Highway Insurance.
In early December 2002, the insurer said it would honour its contract with NMT until the end of the year and then cease investment.
The administrator said that the system was still running and brokers with concerns should contact NMT.
In a statement to brokers on 20 December the administrator said: "A number of offers for the business were received and, during this week, we have been negotiating with two parties to achieve a succcessful sale.
"Unfortunately neither party was able to complete a sales contract.
"As a consequence, the administrator had no option but to terminate staff contracts and close down the business, effective immediately.
"This means that all services (including the help desk) ... will no longer be available."
Market sources suggested that HSBC was interested in buying the software house, but the deal never materialised.
NMT owns broker software system Premier Plus.
The administrator said user databases would now be made available for an additional charge.