The proposed sale of the Royal Automobile Club of Western Australia’s (RAC WA) insurance division to Insurance Australia Group (IAG) has generated notable concern among RAC members and the broader insurance sector.
Some policyholders have indicated they may reconsider their insurance arrangements if the transaction is completed.
One RAC customer, Cameron, told ABC Radio Perth that he was surprised by a recent premium increase despite a clean claims history.
“Last year, my premium went up about $30 to $40 to my surprise … never had an accident, never made a claim. It was good to be able to go in and talk to someone, they were really helpful … maybe I will be looking at other insurance options [if the deal goes ahead],” he said, as reported by ABC.
Another member, George, expressed scepticism about the transition, stating: “As soon as RAC change, I’m going elsewhere.”
In May 2025, IAG announced an agreement to acquire RAC WA’s underwriting operations for $1.35 billion.
The deal includes a 20-year distribution agreement, allowing RAC to continue selling insurance products under its brand while IAG assumes responsibility for underwriting, claims management, product development, and pricing.
Nick Hawkins, CEO of IAG, said: “Our alliance with RAC will draw on our proven track record with successful motoring club partnerships and help us keep more Western Australians safe through competitive, accessible, and high-value insurance products and services.”
RAC has stated that claims handling capabilities will remain in Western Australia following the transition.
It cited several reasons for the sale, including increased regulatory complexity, higher claims volumes and expenses, rising reinsurance costs, and the need for larger capital reserves to address claims and natural disasters.
Rob Slocombe, RAC group CEO, said: “IAG brings national scale, global reinsurance capability, and industry-leading technology to support RAC members, along with a deep understanding of member-focused organisations.”
The Australian Competition and Consumer Commission (ACCC) has identified potential risks to competition in Western Australia’s insurance market as a result of the proposed acquisition.
The regulator has warned that the deal could reduce competition in both motor and home and contents insurance, given RAC’s current market position.
ACCC commissioner Dr Philip Williams commented: “RACI competes strongly in Western Australia with its well-recognised brand and focus on customer service. It also appears likely to continue to compete strongly in the future, if the proposed acquisition does not eventuate.”
The ACCC has raised concerns that increased market concentration could lead to higher premiums and diminished service quality for consumers, as well as potential impacts on access to repair services for rival insurers.
The Motor Trades Association of Australia (MTAA) has formally opposed the acquisition, arguing that it would give IAG control of a significant share of Western Australia’s motor insurance market.
MTAA interim executive director Rod Camm said the consolidation trend could result in higher premiums, reduced consumer choice, and challenges for independent repairers.
Camm said: “This is not coincidence – it is a pattern. Trusted member-based insurers are being swallowed up one by one. What’s left is a market dominated by a small number of giant players, and that means higher premiums, less choice, and greater risks for consumers.”
The MTAA has renewed its call for a mandatory national Motor Vehicle Insurance and Repair Industry Code of Conduct, intended to protect consumers and ensure fair treatment for repairers.
