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UPDATE 3-Australian regulator raises antitrust doubts over Aon's $30-bln Willis Towers bid

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(Updates with Willis reaction)

Feb 18 (Reuters) - Australia's competition regulator onThursday raised initial concerns over Aon's $30 billionbid for Willis Towers Watson to create the world'slargest insurance broker, close on the heels of a similar moveby EU antitrust regulators.

The merger could significantly hurt competition incommercial risk, reinsurance and employee benefits broking andadvisory services in Australia, the Australian Competition andConsumer Commission (ACCC) said.

The pandemic has triggered a sharp rise in claims forinsurers and hit their investment portfolios, which along withfalling valuations have sparked several deals in the insuranceindustry.

Aon bid for Willis in March last year in an all-stock deal,which was the insurance sector's largest ever.

Representatives of Aon and Willis declined to comment on thematter.

The regulator said the deal may lead to price increases orreduced service levels for large or high-value commercialinsurance customers and may also limit the insurance coverageand pricing smaller brokers could get for their customers.

It was particularly concerned about the effects of themerger on reinsurance broking services, which it deemed vitalfor the Australian economy.

Australian insurers have been hit by claims from naturaldisasters such as wildfires and hailstorms and have bumped uptheir reinsurance covers in recent times to help shield theimpact of these unforeseen large-scale payouts.

The European Commission had raised similar concerns aboutthe deal in December, but suspended its investigation inFebruary as it waited for the U.S. insurance broker to providedata required for the case.

The ACCC said feedback on the issues it had raised was dueby March 12.(Reporting by Rashmi Ashok in Bengaluru; additional reportingby Arundhati Dutta and Arpit Nayak; Editing by Maju Samuel andArun Koyyur)