Aon has entered into a definitive agreement to acquire CoverWallet, a digital insurance platform for SMEs, according to an official announcement.
The transaction is expected to close during the first quarter of 2020 and will give Aon additional access to the fast-growing digital insurance market for small and medium-sized businesses which is worth over $200bn in premiums.
Earlier this year, CoverWallet and Aon announced an initial commercial partnership and launched a pilot in Australia which later expanded to the US.
Known as Aon Direct in Australia, Aon is leveraging CoverWallet’s platform to cater to the Australian SME insurance market which accounts for an estimated A$9.4bn ($6.4bn) in general insurance premiums based on McKinsey’s estimates.
Founded in 2015, New York-headquartered CoverWallet seeks to reinvent commercial insurance and maintains many strategic partnerships with major insurers including Chubb, AIG, Zurich and Liberty Mutual among others.
In Australia, 98% of businesses have less than 20 employees and can be considered to be SMEs.
However, a report by the Insurance Council of Australia found a low insurance penetration rate among Australian SMEs which places them at significant risk and called for insurance solutions to bridge the protection gap.
Thirteen percent of SMEs were not insured at all and 1.9% were underinsured as SMEs reported the insurance process to be too complicated and time consuming, said the report.