Potential financial partners and participants in the project—including International Business Machines Corp. and Aon Corp.—had been lined up to help deliver the system and potentially create a new parent company for Stamford, Conn.-based InQuisLogic, a unit of XL Capital Ltd.

To date, however, IQL has not delivered a final product, and whether such a system will ever be provided by the company remains in question.

IQL is now regrouping and focusing on the development of a system for in-house use by XL Capital units, said Richard R. Morano, interim president of IQL and president and chief executive officer of Global Services, a support services unit of XL Capital. Several issues must still be resolved before an in-house system is completed, Mr. Morano said.

Additionally, the effort to bring in outside investors has been put on hold, he said.

IQL's yet-to-be-developed risk management information system was supposed to allow users to tap a huge database addressing the entire spectrum of enterprise risk. More than 180 enterprise risks have been catalogued, ranging from fire to litigation to interest rate fluctuation risks. The database was to provide users with information on the best practices in controlling those risks, as well as measures that have failed for risk managers.

The IQL enterprise risk management information system arose from a concept developed for Microsoft Corp. by the software giant's former risk manager, Scott Lange. Microsoft decided to wait for outside development of the product before implementing it itself, and XL took over the development. XL now owns a copyright to the system's structure, Mr. Morano said.

Mr. Lange left Microsoft in December 1998 and assumed the role of chief knowledge officer for IQL. He remains on IQL's payroll, but IQL is in the midst of reviewing who will be assigned to the product's continued development and in what capacity, Mr. Morano said. Mr. Lange would only confirm he is still employed by IQL and declined to comment on the system's development.

XL remains committed to the development of a final product by IQL, and creation of the system is continuing, Mr. Morano said.

''We feel very, very good about it, conceptually,'' he said. ''The product intent, all of that; there is great support for it.''

XL believes it can use the final product to distinguish itself from competitors and bring additional value to its customers, Mr. Morano said. An enterprise risk management tool could be especially valuable as XL moves to offer a broader array of financial services, including insurance and financial portfolio management, he said.

XL also knows, through market research, that there is a great demand for such a product. Crowds of risk managers flocked to an IQL booth at the 1999 Risk & Insurance Management Society Inc. conference in Dallas last April. Risk managers were eager to learn more about the potential Internet-based tool.

Back then, former IQL President and CEO William M. Thornhill said that the company would unveil industry-specific versions of the system over the summer, and that the product would be ready for market in the third quarter of 1999.

That has not happened, and Mr. Morano said it is impossible for him to say whether IQL's announcements last spring were premature. He noted that he was not at the helm of IQL at the time.

''I can't answer for those who were here, because when you are in a situation, you may feel you are ready to do something at that moment in time,'' he said. ''I wasn't here, and I can't put myself in their position and how they responded to that.''

Mr. Thornhill, who at one time headed XL's underwriting, has left IQL and could not be reached for comment.

Observers familiar with the project say IQL faced problems developing the idea and lost one of its most strongest supporters within XL when Robert Cooney, formerly president and chief operating officer for X.L. Insurance Co. Ltd. of Hamilton, Bermuda, left the company.

Mr. Cooney is now president and CEO of Max Re Ltd. of Hamilton, Bermuda.

His departure from XL, among other factors, may have slowed IQL's product development and may have contributed to IQL's change in direction from creating a product that could be distributed industrywide to creating an in-house product.

Mr. Cooney could not be reached for comment.

''In this case, I think it was a series of things that were unavoidable, and the culmination was when Bob (Cooney) decided to leave the company,'' said Dick Riley, chairman and CEO for Chicago-based Aon Risk Services of the Americas.

Aon had been poised to become a financial partner and participant in IQL's original mission, but then IQL changed its direction, Mr. Riley said. If IQL returns to its original mission, Aon is still willing to participate, he said.

Jay Deragon, chairman of Nashville, Tenn.-based The Deragon Group, said that IQL had problems. But he declined to elaborate on what those problems have been.

''There were more problems, apparently, and I'm not free to talk about the details—only to say, it definitely slowed things down to step back strategically and say, 'What direction should we take?' '' Mr. Deragon said.

Mr. Deragon was hired by IQL to conduct market development research. He said last year that the product's developers wanted it to accelerate market changes by greatly expanding the role of risk managers and their understanding of the risks their companies face (BI, Dec. 7, 1998). A greater understanding of risks also could facilitate a greater number of products being offered to address those risks.

Mr. Morano acknowledged that the project did get off track. But the problems have been nothing more than those common to developing any technical product, he said. They had to do with ''internal philosophical decision making'' about how best to go forward, how the product was going to work, and what service providers would be involved.

Now, an in-house marketing committee has been formed at XL to evaluate IQL's final product and how that system will serve the needs of XL's business units, Mr. Morano said. IQL will not drive the final development of the system. Instead, XL business units will, he said.

In-house market and beta testing must still be conducted to determine how the final product will fit in at XL, Mr. Morano said.

''We are looking at that whole structure to see the best way to organize it going forward. We haven't made that decision yet,'' he said. ''We just started going back, exploring and assessing with (business units) what we have, and what their thoughts are, and what the gaps are, and what we need.''

Those questions will be answered when a final product is ready for in-house use, Mr. Morano said. In-house use, however, could mean that brokers and clients who conduct business with XL finally will have access to the system, possibly through an XL site on the World Wide Web.

''I want to make sure we have everything lined up before we make any further announcements and raise any more expectations in the marketplace,'' he said.

Observers agree that there is a huge desire for an enterprise risk management system that can be available to the entire risk management industry.

There was a phenomenal response within Aon when it first heard of IQL's attempt to draw in insurance, technology and financial industry players to create an enterprise risk system that could be distributed to risk managers, Aon's Mr. Riley said.

''Our people thought, 'My gosh, we finally found the right way to do this,' because one company can't do that by itself,'' he said. ''You need to have an industry initiative. It's like a lot of other issues; the industry needs to get together, and the industry seems to find it very hard to get together.''