Watchdog again blocks sale of RAC WA insurance arm to east-coast giant

The competition regulator has again blocked the sale of RAC to the east-coast-based IAG, saying it would reduce competition in WA's insurance markets and increase premiums. The RAC maintains that members would be better off under a national insurer that would "strengthen RAC's ability to respond to a changing insurance landscape" and reduce the risk it carries alone. What's next? IAG will now lodge a public benefit application with the watchdog, which will then decide whether any public benefit from the acquisition would outweigh the detriment. Australia's competition watchdog has again blocked the sale of WA's largest insurer to an east-coast industry giant, reiterating the purchase would likely reduce competition in the state's insurance markets and drive up premiums. The Royal Automobile Club of WA (RAC WA) announced in May 2025 it would enter into a 20-year "partnership" with Sydney-based Insurance Australia Group (IAG), in a deal worth $1.35 billion. After the Australian Competition and Consumer Commission (ACCC) originally opposed the acquisition in December 2025, the two companies lodged applications for a reassessment. The ACCC conducted an "in-depth assessment" of the proposal, finding the deal would leave IAG in control of more than half of WA's motor vehicle and home and contents insurance markets and "would have the effect or likely effect of substantially lessening competition". ACCC chair Gina Cass-Gottlieb said the acquisition would have seen premiums increase, though the ACCC had not calculated by how much. "The potential for higher prices is significant," she told 102.5 ABC Perth. "Competition is the key driver of keeping prices lower. We see that where there is less competition, there are higher prices, and also that there is the potential for … taking advantage of [market] position." Public benefit vs detriment IAG will now lodge a public benefit application with the ACCC, which will then decide whether any public benefit from the acquisition would outweigh the detriment. It is the first time such an application has been made since the ACCC's new system for reviewing large mergers and acquisitions took effect on January 1, 2026. IAG Managing Director and CEO Nick Hawkins said the sale would result in "long-term benefits for members, customers and communities across Western Australia". "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," he said. RAC Group CEO Rob Slocombe agreed, saying RAC WA's current customers would fare better if they were underwritten by a national insurer. "We continue to believe in the benefits of the proposed partnership with IAG, which would strengthen RAC's ability to respond to a changing insurance landscape and maintain a competitive offering for members," he said. "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." Ms Cass-Gottlieb said the ACCC did not agree with that view. "We understand [RAC WA] is likely to face increased expenses in the future … which applies to all insurers, but our assessment is that would not impact [RAC WA's] financial and capital position to the extent that it would not continue to be an effective competitor," she told 102.5 ABC Perth. Ms Cass-Gottlieb said if the public benefit application failed, the companies would still have recourse. "IAG and [RAC WA] have the ability and right to seek a review in the Australian Competition Tribunal," she said. "There is [a way to go yet]. We might be talking about this further, I think." [Image text:] Blue RAC 9155