Interbank co-operative Swift's bid to break into the insurance business has been put on ice, after reinsurers proved unwilling to invest in the creation of a new electronic trading platform.
Swift signed an agreement with major insurance industry players in September 2008 to develop a central platform for dematerialisation of paper transactions and electronic transmission between insurers, brokers and reinsurers.
The project partners included Swift, the global insurance standards organisation Acord, the reinsurance companies Swiss Re, Munich Re and Scor as well as the reinsurance brokers Aon, Benfield and Willis.
The impetus behind the project stemmed from the so-called 'Rüschlikon Initiative', set up by a consortia of insurance industry players in 2007 to explore the creation of a shared platform for automating the paper trail. Swift joined the initiative in January 2008 to provide both the platform and network for premium and claims accounting transactions.
The central platform was expected to be ready for launch by Spring 2009, followed by a 12-month pilot trial.
A well-placed insurance industry insider tells Finextra that the project is now "dead in the water".
"Reinsurers were individually unwilling to front up the EUR80,000 investment in systems necessary to build the central platform," says the source.
While consortia members have adapted their back office systems to use common data and message standards and a single accounting process, it appears that they could not justify the business case for the creation of an industry-wide messaging hub.
In an e-mailed statement, Swift says: "Whilst the Swift solution was proven as a concept by the pilot customer group, it was concluded that the business case for the participants in terms of savings versus the required automation and systems investments do not currently warrant continued development of the platform. As such, Swift has decided to freeze development at this time and to revisit the solution in the future, based on further market maturity, and associated business case."
The insurance industry is littered with IT messaging projects that cost a great deal and never got buy-in. Lloyd's abandoned its own paperless trading system Kinnect in 2006 after pouring in £70m. With the latest IBM-powered Exchange project Lloyd's did initially entertain a Swift/Ruschlikon tie up but in the end went its own way last year. Lloyd's has been at pains to stress that the latest Exchange project offers a low-cost simple messaging hub for London; a tactic which is winning over cost-conscious brokers in the London market.