The ACCC has sounded the alarm on Insurance Australia Group’s (IAG’s) proposed takeover of RAC Insurance (RACI), pointing to serious risks for Western Australia’s insurance market.
If the deal goes ahead, IAG would take over underwriting for motor and home insurance under the iconic RAC brand — potentially shaking up the state’s insurance landscape.
In a media release, the ACCC said the acquisition could “substantially lessen competition in both the supply of motor insurance and the supply of home and contents insurance in Western Australia.”
RACI is the leading provider of both motor and home and contents insurance in Western Australia and has a significantly larger market share in each compared to any other insurer.
“RACI competes strongly in Western Australia with its well-recognised brand and focus on customer service,” said ACCC commissioner Dr Philip Williams (main picture). “It also appears likely to continue to compete strongly in the future, if the proposed acquisition does not eventuate.”
Williams said the regulator is concerned that the acquisition would increase concentration “in an already highly concentrated market.”
The ACCC fears less competition could mean higher premiums and lower quality for both IAG and RACI customers. There’s also a red flag about IAG potentially squeezing rival insurers’ access to affordable, quality repairers — or hiking their costs — across WA.
