The Australian Competition and Consumer Commission (ACCC) has blocked Insurance Australia Group's (IAG's) proposed acquisition of RAC Insurance (RACI), finding the deal would leave a single insurer with as much as 65% of the Western Australian motor vehicle insurance market.
The regulator announced today that IAG must not put the acquisition into effect. Following an in-depth Phase 2 assessment, the ACCC said it was satisfied the deal would have the effect or likely effect of substantially lessening competition in the supply of motor vehicle insurance and in the supply of home and contents insurance in Western Australia.
ACCC chair Gina Cass-Gottlieb (pictured centre) said the transaction would have brought two of the state's strongest personal lines competitors under one underwriter.
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"The acquisition would combine two large insurers, resulting in a substantial increase in IAG's market share and a significant increase in market concentration," Cass-Gottlieb said. "If the acquisition were to proceed, we consider the level of constraint from other insurers would be unlikely to be sufficient to address the loss of competition arising from the acquisition."
IAG has responded in an ASX announcement that it will lodge a public benefits application, the next stage available under the ACCC's merger control regime. The insurer said the phase allows the broader benefits of the alliance, including customer, community and economic outcomes, to be assessed alongside competition considerations, and that it will seek a determination that the alliance be allowed because it will result in a net public benefit.
IAG's CEO Nick Hawkins (pictured left) defended the commercial logic of the arrangement.
"The RAC IAG partnership will create long-term benefits for members, customers and communities across Western Australia through IAG's advanced technology platforms, claims management expertise, financial stability and global reinsurance protection," Hawkins said. "RAC will remain local and we'll invest in enhancements to benefit the member experience, and continue to deliver high-quality, competitive insurance products and services," Hawkins said.
The Royal Automobile Club of Western Australia, a member-owned mutual based in the state, said it supports IAG's next step. Under the proposal announced last year following a strategic review of its insurance business, RAC would enter a 20-year general insurance partnership under which IAG acquires and manages the underwriting business while RAC continues to distribute under its own brand, retaining local branches, claims teams and call centres.
RAC group chief executive Rob Slocombe (pictured right) framed the partnership as a response to the risk the mutual carries on its own balance sheet.
"By partnering with a national insurer, RAC can reduce the risk it carries alone, while continuing and expanding our focus on members, the WA community and RAC's broader services."
The regulator said the acquisition would have left IAG with a WA market shares of approximately 55% to 65% in motor vehicle insurance and approximately 50% to 60% in home and contents insurance. RAC Insurance is the market leader in both lines in the state, operating under the RAC WA brand, while IAG supplies home and motor vehicle insurance there primarily under the NRMA brand after transitioning customers away from SGIO from 2022.
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"We conducted extensive inquiries and analysed material provided by IAG, RACI and third parties such as other insurers and industry associations to examine the likely impacts on competition," Cass-Gottlieb said. "Our assessment is that IAG and RACI are effective competitors in Western Australia. The ACCC considers that IAG is likely to be a stronger competitor than it is presently if the acquisition does not proceed."
The ACCC examined whether the acquisition would allow IAG to restrict competing insurers' access to repair services, and separately whether competition would be lessened in the acquisition of smash repair services in certain Western Australian regions. It concluded it did not have sufficient evidence to be satisfied on either point. Earlier IB Australia reporting set out the motor trades sector's objections to the behavioural undertaking IAG offered the regulator.
IAG sought clearance in 2025 under the previous informal merger regime and was opposed in December of that year. It notified the acquisition again under the formal regime that commenced on 1 January 2026, and the ACCC escalated the matter to an in-depth Phase 2 assessment in April. The ACCC has 50 business days to determine a public benefit application, subject to any extensions.
Alongside its NRMA, Swann Insurance, ROLLiN', Cylo and Lumley Special Vehicles brands, IAG provides intermediated insurance through brokers, authorised financial representatives, institutions and agents under the CGU and WFI brands, and underwrites products distributed by financial institutions including ANZ, Bendigo and Adelaide Bank, and People's Choice Bank. The insurer acquired RACQ Insurance in Queensland in 2025 and underwrites RACV-branded home and motor vehicle insurance in Victoria through a joint venture, part of a wider reshaping of motoring club underwriting in Australia.
