Australia’s competition regulator has moved to block Insurance Australia Group’s proposed acquisition of RAC Insurance, arguing the deal would materially weaken competition in Western Australia’s personal insurance market.
The Australian Competition and Consumer Commission said its investigation found the transaction would likely reduce competition in both motor vehicle insurance and home and contents insurance across the state.
IAG plans to acquire RAC Insurance from the Royal Automobile Club of Western Australia.
According to the ACCC, combining the two businesses would leave IAG with an estimated 55-65% share of the Western Australian motor insurance market and around 50-60% of the home and contents segment. That level of concentration, the regulator said, raises clear concerns.
Gina Cass-Gottlieb, chair of the ACCC, said the acquisition would remove strong competitive tension between IAG and RAC Insurance.
She said the loss of rivalry would likely give IAG scope to lift premiums and trim product quality, with knock-on effects for the wider market.
RAC Insurance currently leads the Western Australian market in both motor and home insurance, trading on the strength of the RAC WA brand, pricing discipline, and claims service. The ACCC described it as a key competitive force.
IAG, meanwhile, ranks among Australia’s two largest personal insurers and holds a solid position in Western Australia through brands such as NRMA.
The regulator pointed to IAG’s scale, technology capability, and financial resources as factors that would further tilt the market if the deal went ahead.
The ACCC said it reviewed the role of other insurers operating in Western Australia, including Suncorp, Allianz, QBE, Auto & General, Youi, and Hollard. While these firms compete in the state, the commission concluded they would not be able to offset the loss of competition resulting from the transaction.
Given the historical difficulty rivals have had in growing market share in Western Australia, we are concerned that IAG would face insufficient competitive constraint after the acquisition
Gina Cass-Gottlieb, chair of the ACCC
In response, IAG said it now plans to lodge an application for assessment of the proposed alliance under Australia’s new mandatory merger control regime, which comes into force on 1 January 2026.
Nick Hawkins, managing director and chief executive of IAG, said the alliance would improve the experience for RAC members and strengthen resilience against industry pressures.
He said the group remains committed to local investment, service quality, and competitive pricing for Western Australian customers.
Hawkins added that IAG’s national scale, technology investment, and capital strength would support enhancements to products and services if the alliance proceeds.
For now, the deal sits in regulatory limbo. According to Beinsure, the ACCC’s stance signals a tougher line on consolidation in regional insurance markets, especially where a single transaction risks reshaping competition for millions of policyholders.
