ACCC Blocks IAG’s Proposed Acquisition of RAC WA’s Insurance Arm: What WA Businesses Should Know

(Based on and crediting the original ACCC media release published 11 December 2025)

The Australian Competition and Consumer Commission (ACCC) has announced that it will oppose Insurance Australia Group’s (IAG) proposed acquisition of RAC Insurance Pty Ltd (RACI), the insurance arm of the Royal Automobile Club of Western Australia (RAC WA). This decision, originally reported by the ACCC, follows an extensive investigation into the likely competitive impacts on Western Australia’s insurance market.

While Bane Legal Services is not a law firm and does not provide legal advice, we help business owners connect with the right commercial lawyer for transactions, mergers, acquisitions, and regulatory matters, ensuring you have specialist legal expertise on your side.

ACCC rejects IAG’s bid for RAC Insurance after finding the merger would weaken competition in WA’s motor and home insurance markets.

Why the ACCC Opposed the Deal

The ACCC concluded that IAG’s acquisition of RACI would likely substantially lessen competition in the supply of motor vehicle insurance and home and contents insurance across Western Australia.

RACI is the current market leader in both categories, holding strong brand recognition through RAC WA and offering competitive pricing and high-quality service. IAG, meanwhile, is one of Australia’s largest personal insurers, backed by strong brand presence (including NRMA), significant financial capability, and advanced technology systems.

If the transaction proceeded, IAG’s combined market share in WA would rise to:

• 55–65% of the motor vehicle insurance market, and

• 50–60% of the home and contents insurance market.

According to ACCC Chair Gina Cass-Gottlieb, removing the competitive tension between IAG and RACI would likely lead to higher premiums, reduced service quality, and a ripple effect that weakens competitive offerings across the broader insurance sector.

Why Rivals Would Not Offset the Loss of Competition

The ACCC also assessed the role of other insurers in Western Australia, including Suncorp, Allianz, QBE, Auto & General, Youi, and Hollard.

Despite their presence, the regulator found that:

• These insurers have historically struggled to grow their WA market share.

• They would be unlikely to provide sufficient competitive pressure if IAG absorbed RACI.

• Consumers would likely face fewer choices and less pricing discipline in the market.

RACI Likely to Remain a Strong Competitor Without the Acquisition

The ACCC examined the counterfactual: what would happen if IAG did not acquire RACI?

Despite industry-wide pressures such as higher reinsurance costs, increased frequency of extreme weather events, and rising claims and regulatory expenses, the regulator found that:

• RACI remains profitable,

• Is well-positioned to manage ongoing challenges, and

• Can continue as an effective and vigorous competitor in Western Australia.

The ACCC also looked at whether the merger would enable IAG to limit competitors’ access to repair services but found little evidence that IAG would have the incentive or ability to engage in such conduct.

What This Means for WA Businesses and Policyholders

For Western Australian businesses, strata corporations, franchisors, franchisees, and property owners, the ACCC’s decision means:

• Insurance competition remains stronger than it would have been post-merger.

• Premium increases may be more contained in the short to medium term.

• RACI stays active as an independent competitor.

For businesses considering transactions or commercial partnerships within regulated industries like insurance, ACCC scrutiny remains high, especially for deals that may consolidate market power.

Need Guidance on Competition, M&A, or Regulatory Risk?

Bane Legal Services is not a law firm and does not give legal advice.

However, with 30+ years of business experience, we act as your trusted legal matchmaker, connecting you with the right commercial, competition, or M&A lawyer to help you navigate:

• ACCC compliance and competition law issues

• Complex merger or acquisition structures

• Regulatory approval processes

• Commercial contract and corporate governance advice

If your business is exploring a transaction or facing regulatory questions, we can introduce you to the right legal specialist to protect your commercial interests.