Aon said it has agreed to acquire InsurTech startup CoverWallet in a bid to boost its presence in the growing digital insurance market for small and medium-sized business customers.

Neither side disclosed financial terms. The transaction is expected to close during the 2020 first quarter, after which the CoverWallet organization will go to market as CoverWallet, an Aon company.

Aon, a broker, industry consultant and global professional services firm, said it acquired the New York-based startup to gain added access to “the fast-growing, $200-plus billion premium digital insurance market for small and medium-sized businesses.” Aon added that it also wants to use CoverWallet’s platform to develop and scale up other digital services that dovetail with its own growth strategy.

“We are excited to combine Aon’s expertise in data and analytics and global distribution with CoverWallet’s market-defining platform to create new sources of value for our clients,” Greg Case, Aon’s CEO, said in prepared remarks. “CoverWallet’s culture of innovation is transforming the insurance landscape, and together we have the opportunity to further strengthen and expand the application of their digital client experience.”

Aon has had some time to learn about CoverWallet’s approach and culture before pulling the acquisition trigger. Earlier this year, CoverWallet and Aon announced an initial commercial partnership, launched a pilot in Australia that later expanded to the U.S., and worked together to build additional pilot programs in the U.S., the companies noted.

CoverWallet, which launched in 2016, has attracted more than $40 million in venture funding from investors including Union Square Ventures, Index Ventures, Two Sigma Ventures, Foundation Capital, Zurich Insurance Group and Starr Companies. The company started out as a digital insurance agent, focused on analytics-based technology designed to make it easy to understand, buy and manage business insurance online. Other insurers have partnered with CoverWallet in recent months to use its technology as a framework for launching their own small business insurance platforms, including Chubb, CNA, Progressive, Starr, AIG, Zurich, The Hanover, Hiscox, Liberty Mutual and AmTrust.

CoverWallet co-founder and CEO Inaki Berenguer said that Aon’s “shared vision” will allow his company to continue its mission as part of a much larger corporate entity.

“We started CoverWallet to reinvent commercial insurance. By building our customer-centric platform and leveraging advanced data science, beautiful design and state-of-the-art technology, we have been able to simplify insurance,” Berenguer said in prepared remarks. “Aon’s shared vision means we can continue pushing the boundaries of innovation into new markets and new products at a greater scale.”

Once the deal closes, CoverWallet will become part of Aon’s New Ventures Group portfolio, which focuses on delivering new sources of value to clients that expand Aon’s addressable market. As part of the New Ventures Group portfolio, CoverWallet will apply its data and analytics capabilities, technology, and operational expertise to the broader Aon digital client experience, while also working closely with leadership across Aon’s geographies and global solution lines to accelerate the growth of CoverWallet’s core business, according to the deal announcement.

Formed in 2018, Aon’s New Ventures Group has experienced significant growth in its first year, according to the company, focused on areas including intellectual property and public sector partnerships.

CoverWallet, founded in 2015 by Berenguer and fellow technology entrepreneur Rashmi Melgiri, has more than 300 employees across engineering, digital marketing, data science, business intelligence, design and operations, with offices in New York City, Rochester, N.Y., and Spain, among others.

Source: Aon, CoverWallet