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Aon and WTW are two of the three largest providers of commercial risk, reinsurance and employee benefits broking and advisory services globally, including in Australia.
The ACCC is concerned that the proposed merger will significantly lessen competition in the supply of these services in Australia.
“We are concerned that the combination of Aon and WTW will remove a significant competitive constraint from the markets for commercial risk broking to large customers or those with more complex and/or high-value insurance premiums; reinsurance broking; and employee benefits broking in Australia†ACCC Commissioner Stephen Ridgeway said.
The proposed merger may lead to price increases or reduced service levels for large, complex or high-value commercial insurance customers. It may also limit the insurance coverage and pricing smaller brokers are able to obtain for their customers.
The ACCC is considering whether the effects of the proposed merger are especially pronounced in certain commercial insurance risk classes or industry specialities such as financial and professional, cyber, marine insurance and insurance for construction projects.
The ACCC is also concerned about the impact of the proposed merger on the supply of reinsurance broking and advisory services particularly for the supply of reinsurance which covers all current and future policies written by the primary insurer for particular risks.
“Reinsurance is vital for the Australian economy as it enables insurers to continue to write new insurance policies. The ACCC is concerned that the proposed merger will reduce insurers’ choice of reinsurance brokers in an already concentrated market. This could lead to price increases or reduced service levels for customers, including the ability to access sufficient reinsurance capacity,†Mr Ridgeway said.
The ACCC is also concerned that the proposed merger will reduce the three major providers of employee benefits broking and consultancy services in Australia to two, especially for customers that require global coordination of these services.
The proposed merger may also increase the risk of coordinated effects in the markets where Aon and WTW compete. “Reducing the number of brokers in these already concentrated markets, increases the potential for the remaining brokers to align their pricing and strategies,†Mr Ridgeway said. ■