Reports that Insurance Australia Group (IAG) has renewed its bid to acquire RAC Insurance from the Royal Automobile Club of Western Australia (RAC) have prompted closer scrutiny of market concentration in Western Australia’s personal lines sector and raised questions about how the Australian Competition and Consumer Commission’s (ACCC) new merger regime may apply to large insurance alliances. The Motor Trades Association of Australia (MTAA) has referred to the reported bid in its public comments, while IAG and RAC have not recently outlined any revised transaction structure in detail.
Discussion of a possible renewed approach comes in the shadow of the ACCC’s December 2025 decision to oppose IAG’s original proposal to acquire and manage 100% of RAC’s general insurance underwriting business under a proposed 20‑year partnership. At that time, the regulator found the transaction would likely result in a substantial lessening of competition in the supply of motor vehicle insurance and home and contents insurance in Western Australia.
In that earlier assessment, the ACCC concluded that, if the deal had proceeded in its original form, IAG would have held about 55% to 65% of the state’s motor insurance market and roughly 50% to 60% of the home insurance market, prompting concerns about the level of concentration in key personal lines. After the 2025 decision, IAG indicated it intended to seek assessment of the alliance under the ACCC’s mandatory merger control regime, which took effect on Jan. 1, 2026, and requires certain transactions to be notified and cleared before completion. RAC signalled it was aligned with IAG’s decision to pursue that route and maintained its support for a partnership structure. Any renewed bid would be considered against that regulatory backdrop.
MTAA has used reports of a renewed bid to reiterate its concerns about consolidation involving historically member-based motoring club insurers. “This proposal cannot be viewed in isolation. We are seeing a steady consolidation of Australia’s insurance sector, with long-standing motoring club insurers increasingly absorbed by large national corporations,” MTAA interim executive director Peter Jones said. He pointed to IAG’s takeover of RACQ Insurance in Queensland and Allianz’s acquisition of RAA Insurance in South Australia as examples MTAA views as having reshaped state-based competitive dynamics. “A further move on RAC Insurance would continue a pattern that is concentrating significant market power in the hands of only a few insurers,” he said.
MTAA has also highlighted potential consequences for independent repair businesses that service insured motorists. “When a small number of dominant insurers control large shares of the market, their bargaining power increases significantly. That can place pressure on independent repair businesses, restrict motorists’ ability to choose their preferred repairer, and ultimately affect service outcomes for consumers,” Jones said. The association is encouraging panel beaters, mechanical repairers, and other automotive sector participants in Western Australia to respond to an ACCC market survey related to the proposal before it closes on March 12. “It is critical that the voices of repair businesses are heard during this process,” Jones said. MTAA has again called for a mandatory national Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct to establish clear and enforceable rules governing insurer-repairer relationships, positioning this as a response to structural shifts in market power rather than a reaction to a single transaction.
In earlier public material explaining its rationale for partnering with IAG, RAC has framed the proposed alliance as a response to structural pressures in the operating environment, rather than a withdrawal from insurance. The mutual has cited three main drivers for seeking a national underwriting partner: regulatory settings, geographic risk concentration, and limits on scale and capability. RAC notes that prudential and conduct requirements have become more complex, with insurers required to hold higher levels of capital to withstand large or unexpected claims events. It says these obligations place increasing pressure on smaller, locally focused entities carrying substantial catastrophe exposure.
The mutual has also highlighted the profile of its book. RAC insures only in Western Australia and currently underwrites close to $270 billion of home and motor risk, with a large share concentrated in Perth. According to RAC, this creates exposure to correlated losses if a single major event affects a substantial portion of members at the same time. RAC contrasts this with the position of a national insurer such as IAG, which it says can spread exposures across multiple jurisdictions and lines, so that severe losses in one area can be partially offset by experience elsewhere in the portfolio.
From a capability perspective, RAC has said that as a single‑state underwriter there are limits to the investments it can make on its own in technology, systems, data, claims operations, and resilience. RAC argues that a partnership model would provide access to scale and expertise that it says would be difficult to replicate independently, while it continues to focus on its brand, member relationships, and advocacy role. “We are not getting out of insurance; we would simply be changing the way it is delivered,” RAC has said, characterising the alliance as a way to keep its offering “strong, sustainable, and resilient for the future.”
Under the previously outlined 20‑year arrangement, IAG would acquire and manage RAC’s insurance underwriting business, while RAC would continue to distribute RAC‑branded motor and home products to its members. The reported renewed bid is understood to relate to this general model, subject to any changes arising from the new merger regime, although the parties have not publicly detailed any revised structure.
If a transaction of this kind were cleared and implemented, RAC policyholders would receive updated product disclosure statements listing IAG as the underwriter. In its earlier communications, RAC has said that members would continue to deal with RAC through existing Western Australia-based call centres, branches, and claims support, and that IAG would maintain a significant claims handling presence in the state. RAC has said the structure is intended to reduce the underwriting risk it retains, adjust how capital is deployed across its activities, and maintain a local customer interface while using IAG’s national balance sheet and operational resources.
Following the ACCC’s initial 2025 decision to oppose the transaction, IAG managing director and CEO Nick Hawkins said the company acknowledged the regulator’s role but continued to promote the strategic case for the alliance. “IAG and RAC have proven track records of successful partnerships and are committed to delivering competitive and accessible insurance products for all Western Australians. As part of the alliance, we have committed to staying local, investing in enhancements to the RAC member experience, and continuing to deliver high quality and competitive insurance products and services. This would be made possible by our position as a national insurer, investment in technology capabilities, and strong capital management. Together, we would also continue to invest in initiatives that support local communities and provide benefits to RAC, its members, and Western Australia,” Hawkins said.
RAC’s December 2025 statement on the ACCC’s opposition similarly acknowledged the decision while signalling continued support for pursuing a partnership. “While we are naturally disappointed with this outcome, we acknowledge the role of regulators and the process undertaken. We still believe the proposed partnership has merit and would be beneficial for our teams and members,” RAC said. The organisation said it “remains committed to pursuing the partnership and supports this next step” of seeking assessment under the new regime.
The IAG-RAC proposal and reports of a renewed bid are emerging as an early indication of how the ACCC’s new merger framework will be applied to transactions involving large national carriers and member-based mutuals. MTAA’s call for closer scrutiny of cumulative consolidation, alongside its advocacy for a mandatory MVIRI code, suggests that the debate will extend beyond the outcome of any single deal to broader questions of market structure, bargaining power, and conduct in Australia’s motor insurance and repair supply chains.
