Australia’s competition watchdog has raised preliminary concerns regarding Insurance Australia Group’s (IAG) intended acquisition of RAC Insurance (RACI) from the Royal Automobile Club of Western Australia.  

The Australian Competition and Consumer Commission (ACCC) fears that the merger could “substantially” lessen competition in the insurance sector in Western Australia (WA). 

The deal, valued at $1.35bn (A$2.06bn), includes a 20-year exclusive distribution and brand licensing agreement for RAC-branded insurance products. 

IAG and RACI both offer motor insurance as well as home and contents insurance to customers in WA. 

The proposed acquisition by IAG does not include RAC roadside assistance or its other operations such as auto servicing, finance and travel services. 

The ACCC’s initial view suggests that the acquisition might lead to increased premiums and a reduction in the quality of insurance products. 

The ACCC has also voiced concerns that the acquisition “may enable IAG to limit rival insurers’ access to quality and cost-effective repairers in Western Australia or increase rivals’ costs of acquiring repair services in the state”. 

Such a move could increase the costs for rivals to acquire repair services, which is a vital component of insurance offerings.  

The regulator has invited public submissions on the matter until 18 September 2025. 

ACCC Commissioner Philip Williams said: “RACI competes strongly in Western Australia with its well-recognised brand and focus on customer service. It also appears likely to continue to compete strongly in the future, if the proposed acquisition does not eventuate. 

“We are concerned that the acquisition would increase concentration in an already highly concentrated market.” 

The Royal Automobile Club of Western Australia operates as a member-owned mutual association, offering roadside assistance, general insurance and other services to its members.