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Investing.com -- Aon, the world’s second-largest insurance broker, is facing a lawsuit alleging fraud related to its marketing of credit insurance that helped start-ups raise funds.
A trust representing creditors of bankrupt AI company Vesttoo filed the case in Delaware bankruptcy court on Wednesday, The Financial Times reports. The lawsuit highlights Aon’s expansion into the credit insurance market since 2020.
Vesttoo, an Israeli artificial intelligence company previously valued at $1 billion in 2022 and backed by Goldman Sachs, operated a marketplace for insurers to sell insurance-linked securities to investors. The company filed for bankruptcy in 2023 after discovering that insurance policies on its platform were backed by allegedly fraudulent letters of credit.
A board-ordered investigation at Vesttoo claimed two senior leaders were directly involved in creating fraudulent documents.
The trust established to recover value for Vesttoo’s creditors, including insurance companies Beazley and Markel, alleges in the court filing that Aon also committed fraud while promoting a new "IP-backed lending" product.
Aon has denied the allegations, with a spokesperson telling FT: "This lawsuit represents a perverse attempt by Vesttoo’s bankruptcy estate to shift responsibility for Vesttoo’s deliberate fraud to Aon, one of the fraud’s biggest victims. Vesttoo has already acknowledged in its own investigative report that executives of the company, along with other co-conspirators, were responsible for the fraud and intentionally sought to mislead Aon and other impacted parties. We will vigorously defend Aon against these meritless claims."
The insurance industry had previously viewed the case as a scandal primarily driven by bad actors connected to Vesttoo.
Aon stock was down 0.5% in early Thursday trade.
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