The Australian Competition and Consumer Commission (ACCC) has formally opposed Insurance Australia Group Limited’s (IAG) proposed acquisition of RAC Insurance Pty Limited (RACI) from the Royal Automobile Club of Western Australia. Following an extensive investigation, the ACCC concluded that the transaction would likely result in a substantial lessening of competition in the Western Australian markets for motor vehicle insurance and home and contents insurance.
RACI is the leading insurer in both segments in Western Australia, competing vigorously through its strong RAC WA brand, competitive pricing and high-quality service, including customer claims handling. IAG is one of Australia’s two largest personal insurers and also maintains a strong presence in Western Australia, supported by the NRMA brand, significant financial resources and advanced technological capabilities.
According to the ACCC, combining these two major insurers would give IAG market shares of approximately 55–65% in motor vehicle insurance and 50–60% in home and contents insurance across Western Australia. The authority determined that the acquisition would effectively remove the substantial competitive rivalry between IAG and RACI, thereby reducing competitive pressure on other insurers operating in the state.
ACCC Chair Gina Cass-Gottlieb stated that the transaction would likely enable IAG to increase premiums and reduce the quality of its insurance products, with flow-on effects for competing insurers’ offerings. While the ACCC examined the role of other market participants—such as Suncorp, Allianz, QBE, Auto & General, Youi and Hollard—it found that these firms would be unlikely to offset the significant competitive loss resulting from the proposed acquisition. Historical difficulties experienced by rivals in growing market share in Western Australia reinforced the ACCC’s concerns.
The authority also assessed the counterfactual scenario in which RACI remains independent. Despite industry-wide challenges, including rising reinsurance costs, higher claims expenses and increased regulatory requirements, the ACCC concluded that RACI is a strong and profitable competitor capable of continuing to operate effectively without being acquired by IAG.
Additionally, the ACCC evaluated whether the acquisition might allow IAG to restrict competitors’ access to repair services but identified limited evidence of any ability or incentive for IAG to engage in such conduct.