Unisys faces its third High Court action in 10 years as Prudential
seeks to recover outlay.
Insurance company Prudential claims that it has lost millions of
pounds in a project to build what would have been one of the UK's
largest and most advanced Web-based IT systems.
In an attempt to recover the money Prudential is suing Unisys, one
of the biggest IT suppliers in financial services, over what it
claims are the supplier's "failures and inabilities to perform its
obligations".
Prudential Europe Management Services, Prudential Services and
Prudential Jersey are seeking more than £12m in damages from Unisys
after the alleged failure of a project dubbed "Unite" which was
crucial to Prudential's European expansion strategy. The claim
could total more than £15m.
Unite was based on the Unisure software package supplied by Unisys,
which has been described as the jewel in the crown of the
supplier's European insurance business.
Unisure customers have included Norwich Union, Virgin Direct, and
Royal & Sun Alliance.
A key aim of Unite was to give Prudential agents in Europe the
ability to process orders for new policies and pensions via the
Internet in near real-time.
The termination of the project left Prudential having to enact a
contingency plan and rely on its ageing legacy applications.
This involved part-manual processing of thousands of life policies
and pension plans while it built new systems using mainly in-house
skills.
The main Unite contract with Unisys was signed in late 2000 and
terminated in September 2001 before most of the main Unisure-based
systems had been formally accepted by Prudential.
Since then, the two sides have been working to negotiate a
settlement, Prudential having spent nearly £12m by the time it
cancelled the contract. Unisys was understood to have spent about
£10m on the project.
The launch of High Court action this week indicates that
negotiations have broken down. The claim stated that Prudential
Jersey terminated the software agreement on 7 September 2001 due to
Unisys' "failures".
It added that damages in excess of £12m are being sought, including
"expenditure wasted by reason of [Unisys'] breaches of contract
relating to the Unite project".
It is the third time in 10 years that a Unisys customer has sued
the supplier in the High Court over a problem with an insurance
project (see below).
An executive at a third-party supplier involved in Prudential's
Unite project claimed that both sides were victims of "management
by assertion" - when they had agreed an extremely tight timetable
for delivering the new system, without sufficiently questioning how
achievable it was.
Richard Bowdidge, associate director of specialist IT insurance
adviser Miller Insurance, said he was surprised that the dispute
had led to court action which would raise questions about Unisys'
ability to perform.
No date has been set for a hearing. Prudential and Unisys declined
to comment.
Earlier actions against Unisys
This is the third time
Unisys has faced High Court action for early ending of an insurance
project. The others were:
In 1994 a High Court judge found against Sperry, later Unisys for
misleading sales claims
In 2001 a High Court hearing brought by United Assurance (Royal
London Insurance) accused it of misrepresentation. The case was
settled out of court.