Facing a "challenging economy" and a lack of new spending by insurers, last month AMS Services, Inc. (Windsor, CT), confirmed it had decided to discontinue TowerStreet, a hosted point-of-sale system for insurance processing.
"There have been a couple of evolutions in the TowerStreet concept," says Euan Menzies, president and CEO, AMS Holding group, parent company of Allenbrook, Silver Plume, Rating Services and Insurance Information Exchange (IIX). "When TowerStreet was started in early 2000, it was conceived as a broad-based service that would manage the sales process from the agent to the carrier. When the original product was conceived, we were living in a different world in the capital markets."
When the Internet bubble burst in early 2001, Menzies says, AMS decided to "scale back" TowerStreet to focus on a couple of specific functions, rather than try to tackle the entire sales process. "We decided to focus on three areas: offering a point-of-sales POS product for the agent, use some of the TowerStreet technology to support an insurance Internet exchange product in partnership with some potential Net-based exchange partners;" and "use the TowerStreet architecture to do some development for carriers with Allenbrook."
Towards the end of the summer, TowerStreet watched two of its potential target markets "evaporate," Menzies says. "We launched the client POS product in some states, and although the clients liked the increased functionality, the acceptance was lukewarm. Companies are not investing heavily in new technology in this economy."
The second focus for TowerStreet was to enter the online exchange market. "We had worked out some agreements with some partners, but several of them folded," because of lack of funding, Menzies says. "Other existing exchanges already used other technology. When those two things happened, there no longer was a significant return on investment for TowerStreet."
Menzies says that the TowerStreet model would not work in the current economic climate because the model was "too broad," tried to cover too many functions, "tried to do too much with technology," and didn't rely enough on AMS' domain expertise.
"TowerStreet tried to build a product for an entire industry," Menzies says. "A key to developing a product is to have a combination of technology expertise and industry expertise. TowerStreet had more of a technology focus."
With a lot of development capital free from TowerStreet, Menzies says, AMS will invest more in its business units. "When TowerStreet was launched, it was viewed as a primary growth vehicle for the company," he says. "Over the last 12 months, we have been putting a lot into development and we decided to invest it in the business units."
AMS plans to leverage some TowerStreet technology in its business units, as it already has with AfW Online and Sagitta Online, online agency management systems.
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio