Aon Accused of Contributing to Vesttoo's Collapse Due to Falsified Documents

Aon accused of contributing to Vesttoo's collapse, a $1 billion Israeli insurance startup that went bankrupt after falsifying documents. A trustee alleges Aon ignored red flags and encouraged counterparties to work with Vesttoo despite internal concerns. Aon denies the allegations, saying they are a "perverse attempt" to shift responsibility for Vesttoo's fraud to the insurance broker.

In a significant development in the insurance industry, Aon Plc is facing a civil lawsuit alleging its role in the collapse of Vesttoo Ltd., a once-billion-dollar Israeli insurance startup that filed for bankruptcy in 2023. The lawsuit, filed by the trustee responsible for recovering money for Vesttoo's creditors, accuses Aon of ignoring red flags and encouraging counterparties to work with Vesttoo despite internal concerns [1].

The lawsuit, unsealed in Delaware bankruptcy court, claims that Aon "ignored red flags" about letters of credit and encouraged counterparties to work with Vesttoo despite expressing concerns internally about the business. The trustee, Lawrence Hirsh, alleges that Aon partnered with Vesttoo to scale an Aon insurance product designed to reduce the risk associated with lending to startups [1].

The product in question, Collateral Protection Insurance (CPI), was intended for startups with mostly intellectual property assets. However, the lawsuit alleges that Aon "relied heavily" on Vesttoo's ability to find reinsurance capacity through its capital market investors for its riskiest transactions [1].

Aon has denied the allegations, stating that the lawsuit is 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." A spokesperson for Aon said, "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" [1].

The lawsuit also names China Construction Bank Corp. (CCB) as a co-conspirator in the scheme to produce fake letters of credit used by Vesttoo. CCB has said that a former "low-level" employee based in Hong Kong didn't have authority to issue billions of dollars in letters of credit on behalf of the bank [2].

The lawsuit highlights Aon's aggressive marketing of its CPI product, despite internal concerns about its accuracy and risk. It alleges that Aon steered its riskiest transactions to Vesttoo while ignoring glaring red flags regarding the company's collateral providers, ultimately leading to the startup's downfall [2].

The collapse of Vesttoo has had significant implications for the insurance industry, with insurers and reinsurers suffering hundreds of millions in losses due to the forged letters of credit [2].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-14/aon-accused-of-contributing-to-collapse-of-startup-vesttoo
[2] https://finance.yahoo.com/news/vesttoo-creditors-file-landmark-lawsuit-040000757.html