The Australian Competition and Consumer Commission (ACCC) has rejected Insurance Australia Group’s (IAG) planned acquisition of RAC Insurance from the Royal Automobile Club of Western Australia (RAC WA), citing concerns over insurance merger competition in Western Australia (WA).
Following a thorough review, the ACCC determined that the proposed transaction could result in a “substantial lessening of competition” for motor vehicle and home insurance products in the region.
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In May 2025, IAG reached an agreement to acquire the insurance operations of RAC WA, along with a 20-year exclusive arrangement for distribution and licensing of RAC-branded insurance policies.
The deal, valued at $1.35bn (A$2.02bn), includes $400m for all shares in RAC Insurance and a $950m upfront fee for the distribution agreement.
According to the ACCC, the deal would give IAG a 55–65% share of the motor vehicle insurance market and up to a 60% share of the home and contents insurance market in WA.
ACCC chair Gina Cass-Gottlieb said: “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.
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By GlobalData“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.”
The commission evaluated other insurers operating in WA, including Allianz, Auto & General, Hollard, QBE, Suncorp and Youi but found that these companies were unlikely to counteract the loss of competition resulting from IAG’s proposed acquisition.
Following this decision, IAG intends to lodge an application with the ACCC to assess their alliance under Australia’s new mandatory merger control regime, which will come into effect from 1 January 2026.
IAG managing director and CEO Nick Hawkins said: “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 WA.”
