Having made a big splash in the insurance technology world following its October 2000 debut, Toronto-based P&C policy administration system vendor Castek lapsed into dormancy following a series of troubled implementations. The vendor now has re-emerged, powered by an equity investment and partnership relationship with New York-based global financial services technology vendor i-Flex Solutions, which has become Castek's majority shareholder.
Castek became a victim of its own success when the company's service resources could not keep up with demand for its component-based, platform-independent offering. "We simply sold to too many companies at one time and couldn't ramp up fast enough to meet the demand. We were spread way too thin," acknowledges Yung Wu, Castek's CEO. It didn't help that the vendor had released its product early. "We hadn't yet worked in implementation accelerators," Wu explains.
Wu sees the i-Flex relationship as the occasion for a "second chance," citing his partner's ample resources - i-Flex enjoys roughly $1 billion in annual sales - and proven track record in financial services. Under the alliance, i-Flex will serve as Castek's services and global sales arm. "This allows us to be a pure product company and to scale up," Wu comments. "We always had a killer product, and now we have killer implementation resources."
Acknowledging its poor service record and offering an alternative through i-Flex is a good first step, opines Chad Hersh, a Dallas-based analyst with Celent Communications. "The market is unlikely to ever forgive them for over extending their services," he remarks.
The Castek/i-Flex approach is novel - it involves a known insurance vendor's attempt to reenter the industry and a major vendor's initial entry into the market. Whether the approach will be successful remains to be seen, but Castek enjoys the advantage that its technology is no longer seen as untried, according to Hersh. "It's a system based on technologies that are now more mature," he says.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio