Aon Sued Over Alleged Fraud in Vesttoo Credit Insurance Dealings

Aon, the second-largest insurance broker globally, is now facing legal action tied to its involvement in a failed credit insurance arrangement that helped startups raise capital. A lawsuit filed in Delaware bankruptcy court by a creditor trust for the now-defunct AI company Vesttoo accuses Aon of committing fraud while marketing a new credit insurance product. The case raises significant questions about the risks associated with innovative financial products within the insurance sector.

Vesttoo, once a promising Israeli AI firm valued at $1 billion and backed by Goldman Sachs, collapsed in 2023 after uncovering widespread fraud. The company operated a marketplace for insurance-linked securities, but a board-ordered investigation later revealed that senior leaders had fabricated letters of credit to back those insurance policies. The fraudulent documentation led to Vesttoo’s bankruptcy, and creditors—including insurers like Beazley and Markel—are now seeking recovery through litigation.

The trust claims Aon misrepresented and aggressively promoted an "IP-backed lending" product tied to Vesttoo’s operations. In response, Aon has categorically denied the allegations, stating it was itself misled and was one of the victims of Vesttoo’s internal fraud. Aon pointed to the investigative report conducted by Vesttoo, which confirmed involvement by the firm’s executives in intentionally misleading outside parties.

While the broader insurance industry initially viewed Vesttoo’s downfall as an isolated case of corporate malfeasance, this new lawsuit pulls a major broker into the spotlight. The outcome could shape future due diligence standards and accountability measures for credit insurance and other alternative risk transfer products.