When the announcement came that the plans for a central portal for the insurance industry, i2i-link, had been shelved, few eyebrows were raised. Cracks had appeared in the initiative several months ago, when no concrete date was set for the launch.

So why did software house Misys and its six insurance partners - AXA, Royal & SunAlliance (R&SA), Allianz Cornhill, Groupama, Zurich and Norwich Union - fail to get the plans off the ground?

According to i2i-link spokesman Philip Nunn, the plug was pulled because the time and resources needed to implement the vision meant insurers could not justify the investment required.

It is understood that the events of September 11 have caused insurers to look hard at their investment costs.

The role of Misys
Another major problem was that Misys held a 50% shareholder in i2i-link, with the "big six" insurers sharing the remaining 50%. According to rival software companies, this scared off many other potential investors - software companies, which were concerned about Misys' prominent role, and smaller insurers, which felt alienated.

Technology consultant Ross Hall of Garol says: "To be honest, I am not surprised that I2i-link collapsed. Rather than wasting time trying to build software, the industry might have better spent its time defining standards that software houses could have been required to comply with.

"That way, brokers would not have been faced with yet more confusion over what system sits where in their business, in turn avoiding the obvious conflict between an industry initiative and what some saw as a Misys product."

Computer Science Corporation (CSC) director of general insurance marketing Tony Barker says another stumbling block was that the project seemed to be moving too slowly. It was planned last October, but very little development had been seen since then.

He says: "The rationale behind i2i-link was completely sound. But the insurance industry has shown that benefit needs to be derived quickly from such projects.

"The money invested by insurers was a drop in the ocean for them, but they were wrestling with the doubt that, by the time they had achieved what they wanted to, it would be a different ballpark."

Consultant Tony Cornell adds there were other considerations, particularly for the insurers. I2i-link was planned when the market was picking up, but is now dealing with the aftermath of floods, storms and the September 11 attacks. And one of the main sponsors, Groupama, has recently announced its planned sale.

"Underlying all that, the principle of trying to create a central trading portal is difficult," says Cornell. "The emphasis was placed on personal lines, as it is big in volume and transactions, but a lot of what was planned has been done already. But there is still a gap in the market for more technology to assist commercial lines."

However, it seems the general consensus in the insurance market is that the principles behind i2i-link were sound.

The notion of getting real-time quotes to brokers was seen as a positive one. Some current systems contain prices that are several weeks old. While the insurer always guarantees the price, an old price can mean brokers' clients are paying too much or that insurers are receiving too low a premium.

Alternatives on the rise?
A number of software houses, including CSC and Misys, are looking at potential alternatives to i2i-link, albeit on a smaller scale. CSC is currently working on a claims portal, which will house similar principles to those of i2i-link.

The idea certainly seems to have worked in the US, where insurance standards body Acord has produced a system that allows brokers to complete forms online and send them to the insurer. The insurer can then amend any details.

Misys financial services division chief executive Ivan Martin said: "While I fully understand the need for insurers to be able to justify the returns on such investments, particularly in the current environment, I remain convinced that the vision that was set out for the industry is still valid."

But the failure of i2i-link to get off the ground should be a warning to other software houses looking to make large investments.

"This has proved that insurance is not a sure bet and other technology companies may want to look carefully at their investments," says Hall.

"Insurers and software houses have a very unusual relationship. We have a bunch of software houses that are essentially controlling the market, so it is very difficult to break into it."

The failure of i2i-link will again sound alarm bells in the technology market, as one of many high-profile collapses to have happened in the past year.

Charting the collapse

  • October 2000 - Misys announces plans to develop i2i-link along with AXA, Allianz Cornhill, Norwich Union, Groupama, Zurich and Royal & SunAlliance, who agree to share £28m of development costs.

  • December 2000 - Misys is in talks with 14 insurers, but fails to sign up any new investors in addition to the "big six".

  • April 2001 - i2i-link fails to show at the British Insurance Brokers' Association (Biba) conference, despite booking a stand. A spokesman cites "a clash of commitments".

  • May 2001 - AXA head of broker development Colin Calder announces the launch of i2i-link will be delayed by "weeks or months", adding: "Getting the model right is what it's all about."

  • June 2001 - Misys announces plans to shelve its two business-to-consumer insurance projects, Screentrade.com and theformula.com.

  • July 2001 - One of the major investors in i2i-link, Groupama, announces plans to sell its UK business.

  • September 2001 - Still no timescale set for the launch of i2i-link.

  • October 15, 2001 - The consortium announces it will pull the plug on i2i-link as funds dry up.

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