Necessity was the mother of invention in the case of Bermuda Connect, a service that uses Lotus Notes and telephone lease lines to create a secure Bermuda intranet.

Already the system has interested a broad cross-section of Bermuda businesses, although there are pending issues that are being addressed.

It began when David Brown, president of Centre Reinsurance Holdings Ltd., reflected on an irritating problem last September.

He could send e-mail to all his affiliated companies around the world, but he couldn't do the same for his auditors and accountants across the street or around the corner.

When asked about it recently, he said, "There's been several attempts to get something going and none of them worked. So in the end, I had the idea of doing something simple. I spoke to the consulting firm in Bermuda, Paragon Bermuda Ltd.

"They said we could set up a simple Lotus Notes-based server centrally, and we all could connect to it and be able to send e-mail to each other. It sounded too simple to be true.

"So we set it up in the consultant's office and now have seven or eight companies connected to it. Centre Re, Ernst & Young, J&H, AS&K, (AON, EXEL, Paragon) the Registrar of Companies and the Bermuda Monetary Authority are connected. And the banks have just come aboard.

"There are other firms waiting to be hooked up. Once you are hooked up, you can send Lotus Notes e-mail across the Island.

"And they've added things that we hadn't thought about at the time. If you have J&H connected, and J&H is connected worldwide to their other offices, you then get access to their other offices.

"It all began really to solve a local problem and is developing into a pretty good intranet.'' Set up as a not-for-profit arrangement for electronic mail through secure attachments, the real driver for many companies is the ability to run electronic applications. Graham Pearson, vice president of Paragon Bermuda said, "You look at the Registrar of Companies and the Bermuda Monetary Authority. Currently there is a horrendous amount of paperwork going between the law firms and special services firms for statutory returns.

"Those applications will be coming on line and will be electronic. Companies will be able to produce their returns electronically, via this system. That's the real benefit to those firms.

"Think of insurance companies. The brokers want to send submissions to the underwriters who can review them and reply. So it is way more than a pure e-mail system.'' Said Mr. Brown, "I've always been a believer in keeping it simple. But past efforts to provide such a service was typical of many communities. They tried to please everybody, accommodate everybody's requirements and nothing gets done.

"I use Lotus Notes and I found a lot of people around the Island do. If you don't, this doesn't work for you. But it was never meant to please everyone.

It just turns out that a lot of people do, so this provides an opportunity.

"Over time, you might be able to share data base information. Electronic forms can be sent and returned, and screened electronically.'' Meanwhile, Mr. Pearson conceded, "There are a few issues pending. We started it as a not-for-profit idea. There have been a few hiccups on the legal side, like how to incorporate it, the issue of the 60/40 rule. There has to be some exemptions required in terms of putting the organisation together to support it.

"It is currently all being put together by AS&K, the law firm, who are also a subscriber. That is the reason why we are a little slow to pull in all those people who are chomping at the bit to join.

"Each subscriber would be a member and simply share the cost of the service through an annual fee to provide the administration and the support of the service.

"The equipment has been purchased. That's all in place, thanks to Centre Re who underwrote that effort, pending the creation or formation of a not-for-profit organisation.'' Apart from the first group of major companies who are already connected and talking to each other, there are another 15 large organisations waiting to come on, and a further 30 smaller organisations who have expressed an interest.

Said Mr. Pearson, "We really have to pull the trigger to let them know how they can come on. We haven't done that yet, pending the formation of the company.'' The system uses Internet protocols, but it is not using the Internet as a transport mechanism.

Mr. Pearson said, "The reason for that is that companies still have major concerns about security. And to a certain extent, some of these companies can't be deemed to be doing business outside of Bermuda.

"And by putting it on the Internet, there could be a case that it is being used as an international carrying mechanism. Some organisations have seen Bermuda Connect as an ideal vehicle to really put a demarcation mark against that potential hazard of being seen to be doing business internationally.

"But right now there are about 240 people connected to the system from the various companies, which will probably grow to about 2,500 on this intranet.

We (Paragon) are administering it and there is now a frame connection for people to come via a high speed connection.'' DAVID BROWN -- Centre Re Holdings chief `had the idea of doing something simple'.