In a Statement of Issues released on Thursday, the Australian Competition and Consumer Commission (ACCC) said the proposed takeover of RAC Insurance (RACI) by Insurance Australia Group’s (IAG) from the WA’s motoring club could significantly reduce competition in the supply of both motor and home and contents insurance in the state.
“The proposed acquisition would increase concentration in already highly concentrated markets,” the ACCC said, adding that RACI is a strong and growing competitor that currently imposes a “significant competitive constraint” on IAG.
Under the deal, IAG would acquire 100 per cent of RACI from the Royal Automobile Club of WA and enter a 20-year agreement to exclusively underwrite insurance products sold under the RAC brand. RAC would retain its roadside assistance and other businesses.
The ACCC noted that RACI has been the largest supplier of both motor and home insurance in WA, with its market share climbing from about 35 per cent in 2019 to nearly 50 per cent in 2024. It is also regarded as one of the most trusted and customer-focused insurers in the state, consistently topping satisfaction surveys.
If the deal proceeds, the ACCC estimates IAG’s share would jump to between 60 and 70 per cent of motor insurance and 50 to 60 per cent of home and contents cover in WA. The regulator warned this may allow IAG to raise premiums or reduce service quality across both its own and RAC-branded products.
Beyond insurance pricing, the ACCC flagged concerns that IAG could use its dominant position to restrict rivals’ access to smash repairers, windscreen services and home repair contractors. That could weaken the ability of smaller insurers to compete, especially in regional centres where repair options are already limited.
ACCC Commissioner Liza Carver said the regulator was seeking industry feedback on the closeness of competition between IAG and RACI, the strength of alternative insurers and whether new entrants could realistically challenge the combined group.
Submissions close on September 18, with a final decision due by November 27.
Meanwhile, in related news, Insurance Business Magazine has reported that IAG has taken control of RACQ Insurance, cementing a partnership both companies say will strengthen services for Queenslanders while combining the scale of a national operator with the legacy of one of the state’s most recognisable brands.
The closure of the deal, announced this week, sees IAG assume responsibility for RACQ Insurance’s claims, products and pricing, while the RACQ brand and member-facing services will remain in place. Employees of RACQ Insurance have transitioned to IAG but continue to operate from the insurer’s Eight Mile Plains head office.
The deal, originally announced in May, sees IAG take over 90% of RACQ’s insurance business in a deal worth around $855 million. The move is expected to add roughly $1.3 billion in gross written premium to IAG’s portfolio.
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