ACCC Blocks RAC WA Insurance Sale to IAG, Citing Competition Concerns

Australia's competition regulator has rejected the sale of Western Australia's largest insurer for a second time, finding that handing control of the business to a Sydney-based rival would squeeze out competition and likely push premiums higher across the state.

The Royal Automobile Club of WA announced in May 2025 that it would enter a twenty-year partnership with Insurance Australia Group, a deal valued at $1.35 billion. When the Australian Competition and Consumer Commission first objected in December 2025, both companies asked for another look. The ACCC obliged, conducting what it called an in-depth reassessment of the proposal. The conclusion remained unchanged: the acquisition would concentrate too much market power in one player's hands.

Under the deal, IAG would control more than half of Western Australia's motor vehicle insurance market and more than half of its home and contents insurance market. That level of control, the ACCC determined, would substantially lessen competition in ways that would harm consumers. Gina Cass-Gottlieb, the ACCC's chair, was direct about the consequence. "The potential for higher prices is significant," she said in an interview with 102.5 ABC Perth. She did not specify by how much premiums might rise, but she framed the issue in terms of basic economics: where competition thins, prices tend to climb. Insurers with fewer rivals face less pressure to keep costs down or to innovate in service.

IAG and RAC WA have not accepted defeat. The companies are now pursuing a different path under a new regulatory framework that took effect on January 1, 2026. They will lodge what is called a public benefit application with the ACCC, arguing that whatever competitive harm the deal might cause would be outweighed by benefits to the public. This is the first time any company has used this mechanism since the ACCC's merger review system was overhauled. Nick Hawkins, IAG's managing director and chief executive, framed the partnership as a way to strengthen RAC's position. "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. Rob Slocombe, RAC's group chief executive, added that partnering with a national insurer would help RAC manage financial risks it currently carries alone while keeping its offerings competitive.

Cass-Gottlieb rejected this reasoning. She acknowledged that RAC WA, like all insurers, faces rising expenses ahead. But she said those pressures would not be severe enough to undermine RAC's ability to compete on its own. The ACCC's view is that RAC remains a viable independent player and that the market benefits from having it stay that way.

If the public benefit application fails, IAG and RAC WA retain one more option: they can appeal to the Australian Competition Tribunal, a separate body that reviews ACCC decisions. Cass-Gottlieb suggested the matter may not be settled soon. "There is a way to go yet," she said. "We might be talking about this further, I think." For now, the deal remains blocked, and the two companies must make their case that the benefits of consolidation outweigh the risks of reduced choice and higher prices for Western Australian insurance customers.