When eCoverage Inc. launched its Web site in September 1999, the San Francisco-based company boldly declared "the industry is history." However, less than two years later, the company itself is history.Despite obtaining more than $16.4 million in private financing and other secured debt, eCoverage ran out of cash, and in March agreed to license its technology to GMAC Insurance Group, a division of GMAC Financial Services.
Proceeds from the agreement were not disclosed, but will be used to pay secured creditors, says Jon Kelly, who was eCoverage's vice president of product development. Private backers, including Accel Partners, E*Trade, RRE Investors and Softbank Technology Ventures, will not receive any proceeds, he adds.
"GMAC has licensed our technology-everything from our coding engine to policy issuance-to drive their Internet sales," Kelly says.
The approximately 5,000 policyholders in 30 states who purchased auto insurance through eCoverage will continue to receive coverage through Security Insurance Co. of Hartford. However, policyholders in 20 states will not be able to renew their policies once they expire.
GMAC declined to comment. The company sells auto, motorcycle, recreational vehicle and homeowners insurance. The policies are marketed directly to affinity organizations, employee groups and through approximately 15,000 agents. In 1999, the company's personal lines' direct-written premiums totaled almost $1 billion.
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