The Australian Competitors and Shopper Fee (ACCC) has rejected Insurance coverage Australia Group’s (IAG) deliberate acquisition of RAC Insurance coverage from the Royal Car Membership of Western Australia (RAC WA), citing considerations over insurance coverage merger competitors in Western Australia (WA).
Following a radical evaluation, the ACCC decided that the proposed transaction might end in a “substantial lessening of competitors” for motorcar and residential insurance coverage merchandise within the area.
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In Could 2025, IAG reached an settlement to amass the insurance coverage operations of RAC WA, together with a 20-year unique association for distribution and licensing of RAC-branded insurance coverage insurance policies.
The deal, valued at $1.35bn (A$2.02bn), consists of $400m for all shares in RAC Insurance coverage and a $950m upfront charge for the distribution settlement.
Based on the ACCC, the deal would give IAG a 55–65% share of the motorcar insurance coverage market and as much as a 60% share of the house and contents insurance coverage market in WA.
ACCC chair Gina Cass-Gottlieb stated: “We concluded that the proposed acquisition would eradicate the numerous competitors between IAG and RACI, and cut back the aggressive strain they every place on rival insurance coverage manufacturers.
“We concluded that the acquisition can be more likely to permit IAG, after buying RACI, to extend premiums and cut back the standard of its suite of insurance coverage merchandise, with possible flow-on results to the choices of different insurers.”
The fee evaluated different insurers working in WA, together with Allianz, Auto & Common, Hollard, QBE, Suncorp and Youi however discovered that these firms have been unlikely to counteract the lack of competitors ensuing from IAG’s proposed acquisition.
Following this resolution, IAG intends to lodge an utility with the ACCC to evaluate their alliance underneath Australia’s new obligatory merger management regime, which is able to come into impact from 1 January 2026.
IAG managing director and CEO Nick Hawkins stated: “As a part of the alliance now we have dedicated to staying native, investing in enhancements to the RAC member expertise and persevering with to ship top quality and aggressive insurance coverage merchandise and providers. This might be made doable by our place as a nationwide insurer, funding in know-how capabilities and powerful capital administration.
“Collectively, we’d additionally proceed to put money into initiatives that help native communities and present advantages to RAC, its members and WA.”
