With the Australian Competition and Consumer Commission (ACCC) determination deadline set for August 26, 2026, the Motor Trades Association of Australia (MTAA) has formally rejected Insurance Australia Group's (IAG) proposed behavioural undertaking.
The undertaking concerns IAG's $1.35 billion acquisition of RAC Insurance Pty Ltd (RACI) in Western Australia.
MTAA's submission on August 7 warns the ACCC that the proposed commitments fail to protect repair businesses, consumers, and competition in the state. IAG has not publicly responded to the association's specific claims as of publication.
The IAG-RACI deal is the third motoring club insurance acquisition in little more than a year.
IAG completed its $855 million acquisition of RACQ Insurance in Queensland in September 2025, under a 25-year exclusive distribution agreement. Allianz acquired RAA's general insurance business in South Australia for $642 million in July 2025, under a comparable 20-year exclusive distribution structure. If the RACI deal proceeds, RACT in Tasmania would be the only member-owned motoring club in Australia still retaining its own general insurance business.
The ACCC decision also carries significance beyond Western Australia, according to the MTAA. The IAG-RACI transaction is only the third deal to reach Phase 2 under Australia's new mandatory merger control regime, which took effect on January 1, 2026. It is the first financial services transaction to do so.
The regime requires businesses to obtain ACCC clearance before completing qualifying acquisitions. A ruling in favour of IAG's undertaking would establish how the new framework handles concentrated regional insurance markets under behavioural remedy offers.
Those implications matter for every broker operating in a market where carrier concentration affects repair access, claims outcomes, and premium competition - not just those working in Western Australia.
Readers can find broader context in IB Australia's analysis of how consolidation is reshaping Australia's personal lines market.
MTAA executive director Bruce Billson (pictured) said the undertaking addresses governance form, not competitive substance.
"This undertaking adds compliance paperwork, but it does not address the issues that matter most to the thousands of small repair businesses that service WA motorists every day," Billson said.
"It is silent on repair pricing, silent on payment terms, silent on consumer choice, silent on network access protections, and silent on the right of repairers to exercise their professional judgement without insurer interference."
The association's central structural objection is a duration mismatch.
The proposed undertaking runs for five years. The exclusive distribution agreement binding IAG to the RAC brand in Western Australia runs for 20. "A five-year set of behavioural promises against a 20-year commercial arrangement is not a proportionate remedy," Billson said. "For 15 of those 20 years, IAG would operate with none of the transaction-specific constraints the undertaking is supposed to provide."
The ACCC's May 25, 2026, Notice of Competition Concerns found IAG would hold 55% to 65% of the WA motor vehicle insurance market. Its home and contents share would sit at approximately 50% to 60%.
MTAA contends – and this remains the association's view, not a regulatory finding – that five years of behavioural oversight cannot adequately constrain a 20-year dominant market position.
IB Australia's earlier coverage details the ACCC's Phase 2 assessment of the IAG-RACI merger and how the regulator reached that preliminary market share view.
MTAA also challenges the independence of the proposed complaints mechanism. Under the current draft, IAG would design, administer, and manage it.
Repairers who depend on IAG for a significant share of their work face real commercial disincentives to complain against the dominant market participant, the association argues.
"A complaints process run by the party you're complaining about is not independent oversight, it is self-regulation by another name," Billson said.
MTAA's primary position is that the acquisition should not proceed at all.
Its submission calls for any final undertaking to match the full 20-year distribution agreement term. It also demands independent complaints handling, repair pricing and payment protections, consumer choice disclosure, and network access safeguards.
Mandatory compliance with the Motor Vehicle Insurance and Repair Industry (MVIRI) Code – the industry framework governing repair standards and insurer conduct – is also among the association's minimum requirements.
"No combination of behavioural commitments can replicate what RACI brings to the WA market as an independent, member-owned insurer," Billson said.
