Australia Blocks IAG’s $960 Million RAC Insurance Takeover

The Australian Competition and Consumer Commission announced its decision Wednesday following an extensive review of the proposed takeover, which would combine two major providers of motor vehicle and household insurance in the state, according to Reuters.

The regulator concluded that the transaction would significantly reduce competition in Western Australia’s motor and home insurance markets, where RAC Insurance is already a leading provider.

Under the proposed acquisition, IAG would gain control of RAC Insurance’s underwriting operations and the rights to provide insurance under the RAC brand. The transaction, announced in May 2025, was expected to add approximately A$1.5 billion in gross written premiums to IAG’s portfolio, Reuters reported.

The ACCC estimated that the combined business would control approximately 55% to 65% of Western Australia’s motor insurance market and 50% to 60% of its home and contents insurance market. The regulator determined that competition from other insurers would be insufficient to offset the impact of the merger.

Despite the regulatory setback, IAG indicated that it intends to continue pursuing the transaction through Australia’s public-benefits authorisation process.

According to Reuters, the company said it would submit an application allowing the ACCC to assess whether the acquisition’s potential benefits to customers, communities and the broader economy outweigh its adverse effects on competition.

IAG Chief Executive Officer Nick Hawkins maintained that the proposed arrangement would deliver long-term advantages for RAC members and insurance customers in Western Australia.

The company said it would invest in improving the customer experience while maintaining RAC’s local presence and continuing to offer competitive insurance products.

The public-benefits process provides a separate route for transactions that fail to obtain competition clearance. Under Australia’s merger rules, the ACCC generally has 50 business days to determine such applications, although extensions are possible.

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Repair Market Concerns Not Substantiated

The ACCC’s decision focused primarily on the potential loss of competition in personal insurance rather than the transaction’s impact on vehicle repair businesses.

During its investigation, the regulator examined whether IAG could use its expanded insurance operations to limit rival insurers’ access to repair services.

However, investigators found insufficient evidence to conclude that the acquisition would give IAG an incentive to restrict competitors’ access to those services, Reuters reported.

The watchdog also determined that the available evidence did not establish that the transaction would substantially reduce competition in vehicle accident repair services in certain parts of Western Australia.

Those findings narrowed the regulatory objections to the proposed acquisition but did not alter the ACCC’s conclusion about its impact on motor and household insurance markets.

Shares Decline Following Decision

IAG shares fell 2.2% in early trading Wednesday, reaching their lowest level since Sept. 10, according to Reuters.

The decision represents another obstacle for the insurer’s proposed expansion in Western Australia. The ACCC had previously opposed the transaction in December 2025 before the companies submitted it for consideration under Australia’s new formal merger regime, which took effect in January 2026.

The proposed deal would establish a long-term insurance partnership between IAG and the Royal Automobile Club of Western Australia, while RAC would retain its other operations, including roadside assistance.