The Australian Competition and Consumer Commission (ACCC) has announced its opposition to Insurance Australia Group Limited’s (IAG) proposed acquisition of RAC Insurance Pty Limited (RACI) from the Royal Automobile Club of Western Australia Inc, citing concerns that the deal would likely lead to a substantial reduction in competition in the supply of motor vehicle, home, and contents insurance in Western Australia.
Meanwhile, IAG, one of Australia’s two largest personal insurers, is also a strong performer in Western Australia, leveraging its well-known NRMA brand, robust IT capabilities, and substantial financial resources.
“The proposed acquisition would combine these two large insurers, leaving IAG with overall market shares of approximately 55 to 65% in motor vehicle insurance and approximately 50 to 60% in home and contents insurance in Western Australia,” the ACCC observed.
ACCC Chair Gina Cass-Gottlieb commented, “We concluded that the proposed acquisition would eliminate the significant competition between IAG and RACI, and reduce the competitive pressure they each place on rival insurance brands.
“We concluded that the acquisition would be likely to allow IAG, after acquiring RACI, to increase premiums and reduce the quality of its suite of insurance products, with likely flow-on effects to the offerings of other insurers.”
Cass-Gottlieb continued, “Given the historical difficulties rivals have had growing their share in Western Australia, the ACCC is concerned that IAG would face insufficient competitive constraints post-acquisition.
“Our investigation found that RACI remains a strong and profitable competitor and is adequately positioned to manage these challenges. We have concluded that if IAG doesn’t acquire RACI, RACI would have the capability to continue to compete effectively in Western Australia in the future.”
In response, the IAG has acknowledged the ACCC’s decision to oppose its proposed strategic alliance with RAC to provide general insurance products and services for RAC members and Western Australians.
Now, the IAG intends to lodge an application with the ACCC for assessment of the alliance under the new mandatory merger control regime, which will take effect on 1 January 2026.
IAG Managing Director and CEO Nick Hawkins said the alliance would enhance the RAC member experience and ensure greater resilience to industry challenges for the benefit of Western Australians.
Hawkins added, “IAG and RAC have proven track records of successful partnerships and are committed to delivering competitive and accessible insurance products for all Western Australians.
“As part of the alliance, we have committed to staying local, investing in enhancements to the RAC member experience and continuing to deliver high-quality and competitive insurance products and services.
“This would be made possible by our position as a national insurer, investment in technology capabilities and strong capital management. Together, we would also continue to invest in initiatives that support local communities and provide benefits to RAC, its members and Western Australia.”
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