IBM issues counterclaim against Co-op Insurance as legal battle continues

The dispute centres around a deal to provide a new service platform for the insurer, which was terminated in July 2017

IBM has denied wrongdoing in a £130m lawsuit from Co-operative Insurance in a dispute over an agreement signed in 2015 to provide an integrated service platform.

And it has retaliated with a demand for £2.89m from Co-op Insurance, for what it says is an unpaid invoice.

The original £55m deal was announced in June 2015. A statement from the Co-op said IBM would build the platform, and “to provide that platform as a managed service for 10 years”.

It added: “IBM will provide technology services for all insurance business functionality including: new business processing; claims processing; policy servicing; and interfacing to third parties.”

But a year later the project hit serious delays and further discussion was held over the future of the programme. This developed into a dispute between the two organisations, with Co-op Insurance demanding compensation for delays and IBM issuing the disputed invoice.

The contract was finally terminated by IBM in July 2017.

A statement released at the time from Co-op Insurance said: “It had been anticipated that the programme to replace and upgrade the core systems would have delivered major components of the new systems by the end of 2016.”

It added that it was “considering all of its options in respect of its rights, and will be considering alternative options for updating its technology”.

Co-op Insurance issued the lawsuit last December, claiming “intentional breaches” of contract by IBM. It says delays to the work mean it did not have to pay the invoice.

Now IBM has hit back, claiming the invoice was for licensing fees which were separate from the scheduled work. It says Co-op Insurance “effectively brought the termination on itself” through the non-payment.

Co-op Insurance has declined to comment “given the ongoing legal proceedings”.

IBM said it “has submitted its defence and counterclaim to the claim made in the High Court by CIS General Insurance Limited and IBM will continue to rigorously defend that claim”.

The case is ongoing.

In this article

Join the Conversation