Aon Acquires Valley Oak Systems

Aon brokerage said it plans to acquire Valley Oak Systems of San Ramon, Calif., a software developer for claims management, and combine it with the company's risk management operation. Financial terms were not released.

The Chicago-based insurance broker said it expects to complete the transaction by the end of January 2007.

Among Valley Oak Systems' offerings is the iVOS “one-system” solution that includes medical bill review, policy underwriting, case management, billing and event management capabilities.

Integration plans call for Valley Oak to assimilate with RiskConsole, Aon's risk management solution system.

“By combining our strengths, we will create a comprehensive risk management information system offering that will have no peer in the marketplace,” said Greg Case, Aon president and chief executive officer.

Randy Wheeler, founder and chief executive officer of Valley Oak, said the acquisition would create the only end-to-end browser-based insurance solution in the global marketplace.

Donald Light, senior analyst for the Boston-based technology consulting firm Celent, said the acquisition continues the predicted roll-up of the insurance software industry.

“While most acquisitions of independent insurance software vendors have been by larger software vendors, this time it is a major broker doing the deal,” he said in a statement.

“The explanation is that Valley Oak's customer base includes a great many risk management units in large employers who self-insure workers' compensation,” Mr. Light said. “Aon's brokerage business targets that same group of risk managers. So from a marketing and sales perspective, the acquisition makes sense.

“Aon's challenge will be to give Valley Oak the resources and freedom to keep its offering fresh and valuable to self-insured employers, as well as other customers such as insurers and third-party administrators,” he added.