Does the break-up of the Aon/WTW merger mean anything for pension funds? (Hint: yes it does!)

Bart Heenk, Jul 30, 2021 11:18:48 AM

As you will have heard, the recent Aon and Willis Tower Watson merger has fallen through. The reason for the collapse of this mega-merger is a direct result of the US Department of Justice’s lawsuit against the two organisations. The complaint filed by the DoJ in June, blocked the merger on anti-trust grounds since it would combine two of the largest insurance companies and create a “broking behemoth.” This was an ‘impasse’ that was all too much for both organisations. 


Yet, we at Avida would rather not focus on the intricacies of the merger or even the fact that it has fallen through (although that is undoubtedly important). We would like to focus on what this merger and ones like it mean for the clients of these organisations. It is possible that if you were a client of Aon or WTW during the merger process, the service which you were given was not up to standard. Think about it, would the focus, energy and time of these two organisations be on you, the client, or on ensuring the success of this $30bn acquisition? 

Indeed, the main focus of each organisation would be ensuring that they come out of the merger on top, that they gain the most positives from it, and that the people in their organisation have most of the benefits. Inevitably, the focus draws away from the client since the priority is the success of the merger. 

plan b

If there is one thing Pension Funds need to learn from this attempted merger, it is that they need to check how much they rely on their advisors and have a plan B for events like this merger. Is complete dependency on 1 or 2 providers healthy?  

If you are too reliant on your provider, then you could be negatively affected by changes in your provider’s organisation. A significant amount of money can be lost if improper attention is given to these areas, it is therefore vital that pension funds properly review their advisors.  

need to review

It also needs to be said that the Aon/WTW merger’s lack of success does not mean that it will be the end of the road for this merger process. Aon will likely be looking to push for something similar, it will not end here. This is because, as the lawsuit showed, this merger was part of a wider push for insurance consolidation -- this may just be the start. This means that for the clients of these organisations, the necessity for an immediate evaluation becomes paramount.  

This reviewing process is not something which should be daunting but a natural part of good business practice. Avida International can help you assess your providers using our Avida International Governance Scorecard (AIGS©). This tool can help you navigate through the whole process and enables you to regularly assess your providers. To date we have carried out more than 100 assessments, which enable you to benchmark your provider's service against this universe. 

Why wait until it is too late?  

Learn more about AIGS here





Related Articles

Does your pension fund board need to learn how to delegate better?

Nov 10, 2021 1:10:54 PM

Delegation is undoubtedly a vital part of good governance, when it goes well it can be the defining..

Read More

Are your Chairs doing the right thing for your pension fund?

Jul 27, 2021 11:31:03 AM

The second blog on our Deadly Sins series is about Chairs, their boards and the potential pitfalls..

Read More

Your Fiduciary Manager has more sway than you think!

Jul 19, 2021 10:46:10 AM

A question which all pension funds should consider is whether their Fiduciary Manager has any..

Read More