Porch Group sues CCB over alleged reinsurance fraud: Report

CCB is accused of working with employees of bankruptcy-hit Vesttoo.

Porch Group, a US insurance and home inspection software provider, has filed a lawsuit against China Construction Bank Corp (CCB), alleging involvement in a significant fraud scheme that led to substantial losses for Porch. 

According to a Reuters report, the complaint accuses CCB of collaborating with employees of Vesttoo, an Israeli insurance firm now bankrupt, to issue counterfeit reinsurance letters of credit. 

READ MORE: Porch sues China Construction Bank in US over reinsurance fraud losses

Porch and its subsidiary, Homeowners of America Insurance Co, paid substantial premiums for non-existent reinsurance until discovering the fraud in July 2023. 

CCB has not yet responded to Reuters' request for comment.

Vesttoo, which provided access to insurance-linked securities, filed for Chapter 11 bankruptcy after uncovering the fake letters of credit. 

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Porch alleges that Homeowners of America suffered significant losses due to a false $300m letter of credit from CCB, resulting in the payment of tens of millions of dollars in insurance claims. 

Porch also incurred losses, including $57m to stabilise Homeowners of America and a decline in stock price following the scandal. Porch seeks monetary damages to be determined at trial.