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Ace-Chubb could impact workers’ comp

Although Marsh suggested it is too early to evaluate the impact of the proposed Ace acquisition of Chubb on the US casualty market, the firm did highlight specific areas likely to be affected, including workers' compensation.

Marsh's head of US casualty Steve Kempsey noted that an area of focus could be accounts in urban areas with larger accumulations of insured employees.

"Some clients with large employee concentrations will undoubtedly create an aggregation of insured exposures to a level that is greater than [the combined entity] Chubb will be willing to retain - particularly for workers' comp.

"We've already put plans in place to help clients secure alternative capacity needed to satisfy their workers' comp insurance requirements if this comes to fruition," the executive said.

Elsewhere, Kempsey suggested that from a broader primary casualty perspective the impact would depend on the new entity's strategy, because the two insurers concentrated on different market segments with different buying styles.

On excess liability lines, he added that while there may be accounts where Ace and Chubb were on the same tower, Marsh doesn't expect this to have a major impact on its casualty clients.

"We'll have to wait and see whether the client or the new Chubb will look to diversify and not be overlined on any risk," the executive said.

Speaking on the recent XL Catlin transaction, the broker said the signs are that the combined entity will keep capacity intact for now.

"Broadly speaking I don't think mergers will have a significant direct effect on competition or availability of capacity in the casualty space.

"That said, M&A activity is expected to continue and the obvious shift to large-scale tie-ups could have a dramatic effect as others are now surely evaluating the need to join forces in order to compete effectively," he concluded.

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