An insurance company is suing China Construction Bank for damages it claims stem from losses related to a scandal involving Israeli insurtech company Vesttoo, according to reports.

The 70-year old China Construction Bank is one of China's four major state-owned banking institutions, with 3.48 million corporate customers, according to Nikkei Asia.

Aon’s White Rock Insurance has filed a lawsuit against the bank for $140 million in damages.

According to the reports, the lawsuit in the New York Supreme Court was submitted by White Rock on August 27.

It alleged that CCB, and its related companies, issued letters of credit representing “more than $2.8 billion of collateral CCB now refuses to honour”.

The filings, first reported by Intelligent Insurer, are also against a banker claiming to represent CCB who allegedly used “an official CCB e-mail account”.

These actions caused White Rock to “justifiably rely on” the banker's “representations to their detriment”. White Rock alleged that CCB “harboured a fraudster” and “failed to deter, prevent and detect a massive fraud committed through those channels”.

White Rock is seeking to recover at least the cost of its $140 million in premiums paid to Vesttoo, as well as its legal fees and all other related costs and damages.

Vesttoo was founded in 2018 and registered a collateralised insurer in Bermuda, Vesttoo Alpha P & C, in 2022, saying it was central to the business model underpinning the entire company.

The insurtech platform started falling apart this year when it was found that a number of LOCs, or collateral used in some transactions, appeared to have been fraudulent.