The Australian Competition and Consumer Commission (ACCC) has escalated Insurance Australia Group’s (IAG) proposed acquisition of RAC Insurance Pty Limited into a Phase 2 review, citing ongoing concerns the deal could reduce competition in Western Australia’s motor vehicle and home insurance markets.
The proposed transaction would see IAG acquire RAC Insurance, the underwriting arm of the Royal Automobile Club of Western Australia, in a deal first announced in 2025 and previously opposed by the ACCC under the former informal merger regime.
Under Australia’s new mandatory merger regime, which came into effect on January 1, 2026, IAG has re-notified the acquisition, triggering a fresh review by the regulator.
ACCC Chair Gina Cass-Gottlieb said the transaction would combine two of the biggest insurers in the state, with RAC Insurance already holding the leading market position in both motor vehicle and home and contents insurance.
“This acquisition would combine two of the biggest insurers in WA,” Cass-Gottlieb said.
“RACI is WA’s market leader both in motor vehicle insurance and in home and contents insurance.”
The ACCC estimates the acquisition would leave IAG with a combined market share of 55 to 65 per cent in WA motor insurance and 50 to 60 per cent in home and contents insurance, raising concerns that reduced competition could lead to higher premiums and lower product quality for consumers.
The regulator is also examining the impact on smash repair services, warning that increased bargaining power could allow IAG to seek exclusivity or priority access from repairers, potentially limiting rival insurers’ access to quality repair networks and increasing costs across the market.
This issue has been a major concern for the collision repair sector, where repairers fear further insurer consolidation could reduce negotiating power and place additional pressure on independent businesses.
The original proposal was blocked in December 2025 after the ACCC concluded the acquisition would likely substantially lessen competition. RAC and IAG have since maintained confidence in the merits of the partnership and moved to seek approval under the new framework.
The Phase 2 review can run for up to 90 business days, with stakeholder submissions open until May 4 and IAG required to pay the applicable review fee by April 29.