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Highlights

  • The ACCC raised preliminary concerns that IAG’s proposed acquisition of RACI could substantially reduce competition in Western Australia’s motor and home insurance markets.

  • The watchdog noted the deal could enable IAG to increase premiums, reduce product quality, and potentially restrict competitors’ access to repair services.

  • Submissions on the ACCC’s Statement of Issues are due by 18 September 2025, with the outcome of the review set to shape the deal’s progress.

Insurance Australia Group Limited (ASX:IAG) has received preliminary concerns from the Australian Competition and Consumer Commission (ACCC) regarding its proposed acquisition of RAC Insurance Pty Limited (RACI) from the Royal Automobile Club of Western Australia Inc. The competition watchdog outlined its issues in a Statement of Issues released today, raising questions over the impact on consumers and market dynamics in Western Australia.

The deal would see IAG underwriting motor and home and contents insurance under the RAC brand, consolidating its position in the state’s insurance market. Both IAG and RACI are leading providers in Western Australia, with RACI holding a particularly strong share in motor and home insurance.

ACCC Preliminary Concerns

The ACCC’s preliminary view is that the acquisition could substantially lessen competition in the supply of motor insurance and home and contents insurance in Western Australia.

"RACI is the leading provider of both motor and home and contents insurance in Western Australia and has a significantly larger market share in each compared to any other insurer," said ACCC Commissioner Dr Philip Williams.

"RACI competes strongly in Western Australia with its well-recognised brand and focus on customer service. It also appears likely to continue to compete strongly in the future, if the proposed acquisition does not eventuate," he added.

According to the ACCC, the proposed acquisition would increase concentration in an already highly concentrated market, potentially allowing IAG to increase premiums and reduce product quality over time.

Concerns Over Access to Repair Services

Beyond pricing, the ACCC raised concerns that the acquisition may restrict rival insurers’ access to repair services in the state. Access to cost-effective and quality repairs, such as smash repairs, windscreen replacements, and home repair services, is a critical part of insurance provision.

If IAG were to limit competitors’ access or increase their costs, the competitiveness of rival insurers in Western Australia could be reduced. Such outcomes, the ACCC noted, could ultimately impact consumer choice and service levels.

The ACCC has invited submissions in response to its Statement of Issues by 18 September 2025, providing stakeholders with the opportunity to present their views. Further information, including the Statement itself, is available on the ACCC’s public register.

Market Context and Company Background

IAG is one of Australia’s largest general insurance groups, operating under multiple brands across Australia and New Zealand. In Australia, it offers products under well-known brands including NRMA, Swann Insurance, ROLLiN’, Cylo, and Lumley Special Vehicles. It also has distribution partnerships with financial institutions such as Bendigo and Adelaide Bank, People’s Choice Bank, and ANZ Bank since 2023.

RAC Insurance, meanwhile, is a Western Australia–based provider of motor and home and contents insurance under the RAC brand. The broader RAC business will retain its roadside assistance, auto servicing, finance, retirement living, and travel and tourism operations, which are not part of the proposed deal.

IAG shares traded 0.40% higher at AUD 8.72 per share on 4 September 2025 following the ACCC’s release.