IAG’s Proposed RAC Insurance Acquisition Could Reduce Competition in WA
The ACCC has raised preliminary concerns that IAG’s proposed acquisition of RAC Insurance in Western Australia could reduce competition, potentially leading to higher premiums and limited repair service access for rivals.
- ACCC warns acquisition may lessen competition in WA motor and home insurance markets
- RAC Insurance holds leading market share in Western Australia
- Concerns over potential premium increases and reduced product quality
- Possible restriction of rival insurers’ access to repair services
- Public submissions invited by 18 September 2025
ACCC Raises Preliminary Competition Concerns
The Australian Competition and Consumer Commission (ACCC) has publicly expressed its preliminary concerns regarding Insurance Australia Group Limited’s (IAG) proposed acquisition of RAC Insurance Pty Limited (RACI) from the Royal Automobile Club of Western Australia (RAC). The deal, which would see IAG underwriting motor and home insurance products under the RAC brand in Western Australia, has triggered scrutiny over its potential impact on market competition.
According to the ACCC, the acquisition could substantially lessen competition in the Western Australian motor and home insurance sectors. RAC Insurance currently holds a dominant position in these markets, boasting a significantly larger share than any other insurer in the state. This strong foothold, combined with RAC’s well-established brand and customer loyalty, makes the prospect of consolidation particularly sensitive.
Market Concentration and Consumer Impact
ACCC Commissioner Dr Philip Williams highlighted concerns that the acquisition would increase concentration in an already tightly contested market. The regulator fears this could lead to higher premiums for consumers and a decline in the quality of insurance products offered by both IAG and RAC under the new arrangement.
Moreover, the ACCC is wary of the potential for IAG to restrict rival insurers’ access to essential repair services, such as smash repairs, windscreen replacements, and home repairs. Access to these services is critical for insurers to provide competitive and cost-effective coverage. Any limitation or cost increase in repair services could undermine the ability of competitors to operate effectively in Western Australia.
Next Steps and Industry Implications
The ACCC has invited submissions from interested parties by 18 September 2025 to further inform its assessment. This period will be closely watched by industry participants, as the final decision could reshape the competitive landscape in Western Australia’s insurance market.
It is worth noting that the acquisition does not include RAC’s roadside assistance or other non-insurance operations, which remain outside the scope of this deal. For IAG, the acquisition represents a strategic move to strengthen its presence in Western Australia, but it faces significant regulatory hurdles that could delay or alter the transaction.
Investors and market watchers will be keen to see how the ACCC balances the potential efficiencies of the acquisition against the risks of reduced competition and consumer harm.
Bottom Line?
The ACCC’s scrutiny signals a challenging road ahead for IAG’s expansion ambitions in Western Australia’s insurance market.
Questions in the middle?
- Will the ACCC ultimately block or impose conditions on the acquisition?
- How might rival insurers respond if access to repair services is restricted?
- What impact could this deal have on insurance premiums and product innovation in WA?
