The Australian Competition and Consumer Commission (ACCC) has moved Insurance Australia Group’s (IAG) planned purchase of RAC Insurance (RACI) into a Phase 2 review, saying the transaction could “substantially lessen competition”.
RACI is part of the Royal Automobile Club of Western Australia (RAC WA).
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In May 2025, IAG agreed to buy the insurance business of RAC WA and sealed a 20-year exclusive deal covering the distribution and licensing of RAC-branded insurance products.
The transaction is priced at A$1.35bn ($965.1m), made up of A$400m for the shares in RACI and a A$950m upfront payment tied to the distribution arrangement.
Both IAG and RACI provide motor cover as well as home and contents insurance in Western Australia (WA).
If completed, the transaction would mean IAG underwrites motor, home and contents policies carrying the RAC brand.
The ACCC is also examining possible effects on smash repair services.
The regulator said it has not formed a final opinion and will continue its assessment during Phase 2.
It is seeking submissions on the Phase 2 Notice by 4 May 2026.
ACCC chair Gina Cass-Gottlieb said: “This acquisition would combine two of the biggest insurers in WA.
“RACI is WA’s market leader both in motor vehicle insurance and in home and contents insurance.
“We consider the acquisition could substantially lessen competition in both the supply of motor vehicle insurance and the supply of home and contents insurance in Western Australia,” she added.
IAG first sought ACCC clearance for the transaction in 2025 under the former informal merger system. In December, the regulator declined to clear the deal on the basis of the information before it at that stage.
After the formal merger regime began on 1 January 2026, IAG lodged the transaction again and the ACCC is now reviewing it under those rules.
The ACCC may place a notified transaction into Phase 2 where it is satisfied the deal, if carried out, could, in all the circumstances, have the effect, or be likely to have the effect, of substantially lessening competition in any market.
Under the Competition and Consumer Act, a Phase 2 review may run for up to 90 business days, unless extended in certain circumstances.
The proposed transaction excludes RAC’s roadside assistance arm and other activities including batteries, finance, home security, retirement living, tourism, travel, tyres and vehicle servicing and repair.
