Insurance Australia Group Ltd (IAG) has submitted a set of proposed remedies to the Australian Competition and Consumer Commission (ACCC) to address the regulator’s competition concerns over its proposed acquisition of RAC Insurance Pty Limited (RACI) from the Royal Automobile Club of Western Australia.
The deal, announced in May 2025, includes a 20-year exclusive distribution agreement for RAC-branded home, motor and niche insurance products.
The total transaction consideration is A$1.35 billion, of which A$400 million is for IAG to acquire 100% of RACI’s shares, equivalent to its expected net tangible assets at completion, and A$950 million upfront for the exclusive distribution and brand licensing agreement.
However, in December 2025, the ACCC objected to the acquisition, noting that RACI was the market leader in motor vehicle and home and contents insurance in Western Australia, competing strongly through its widely recognized RAC WA brand, competitive pricing and high-quality service, including claims experience.
At the same time, it said that IAG, one of Australia’s two largest personal insurance companies, is also a strong insurance company in Western Australia with its well-known NRMA brand, strong IT capabilities and strong financial resources.
“The proposed acquisition would combine the two large insurance companies, giving IAG an overall market share of approximately 55 to 65 per cent in the Western Australian motor vehicle insurance market and approximately 50 to 60 per cent in the home and contents insurance market,” the ACCC said at the time.
Following IAG’s re-notification of the transaction under Australia’s new mandatory merger regime and the ACCC’s final decision due in late August 2026, IAG has made a formal proposal to the ACCC to address competition concerns.
Key commitments set out by IAG include conducting annual product competitiveness assessment and benchmarking exercises.
This will involve developing a competitiveness framework to ensure that RACI products remain competitive relative to other products available in Western Australia, ensuring that products offered to members under the RAC brand are no less favorable than RACI in terms, functionality and benefits of other RACI products available in Western Australia, developing a framework of product pricing and design principles, and conducting annual competitive benchmarking.
IAG also undertakes not to rely on or introduce certain contractual terms into its agreements with crushing repairers.
Specifically, it would not require repairers to work exclusively with IAG, prevent them from accepting work from other general insurers or otherwise penalize them for doing so, limit their ability to provide services to other insurers even though this may be detrimental to IAG, or provide terms that are significantly less favorable than current arrangements regarding the prioritization of repair work.
In addition, IAG has committed not to maintain maintenance service facilities in Western Australia, subject to certain exceptions.
Separately, at its recent Investor Day in Sydney, IAG unveiled an updated strategy and new long-term financial targets under its Ambition 2030 plan, which aims to expand the group’s customer base to more than 11 million and increase gross written premiums (GWP) to more than A$25 billion.
Having successfully achieved the targets set for 2021, IAG said it is well-positioned to deliver on its 2030 ambitions and four strategic priorities: customer focus; insurance excellence; future fit for operations; and exceptional people.
