Insurance Australia Group Limited (IAG) has submitted a package of proposed remedies to the Australian Competition and Consumer Commission (ACCC) in a bid 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 transaction, announced in May of 2025, included a 20-year exclusive distribution agreement for RAC-branded home, motor and niche insurance products.
The total consideration for the transaction was A$1.35 billion, comprising A$400 million for IAG’s acquisition of 100% of RACI’s shares, equivalent to its expected net tangible asset value at completion, and an upfront payment of A$950 million for the exclusive distribution and brand licensing agreement.
However, in December 2025, the ACCC opposed the acquisition, noting that RACI is the market leader in motor vehicle and home and contents insurance in Western Australia, competing strongly through its well-recognised RAC WA brand, competitive pricing, and high-quality service, including claims experiences.
Meanwhile, it said that IAG, one of Australia’s two largest personal insurers, is also a strong performer in Western Australia, leveraging its well-known NRMA brand, robust IT capabilities, and substantial financial resources.
“The proposed acquisition would combine these two large insurers, leaving IAG with overall market shares of approximately 55 to 65% in motor vehicle insurance and approximately 50 to 60% in home and contents insurance in Western Australia,” the ACCC said at the time.
Following IAG’s re-notification of the transaction under Australia’s new mandatory merger regime, and with the ACCC due to make a final determination by late August, 2026, IAG has laid out a formal proposal to the ACCC aimed at addressing competition concerns.
Key commitments proposed by IAG include conducting an annual product competitiveness assessment and benchmarking exercise.
This would involve developing a competitiveness framework to ensure that RACI products remain competitive relative to other products offered in Western Australia, ensuring that products offered under the RAC brand to members are no less favourable than the terms, features and benefits of other RACI products offered by RACI in Western Australia, developing a product pricing and design principles framework, and undertaking annual competitive benchmarking.
IAG has also committed not to rely on or introduce certain contractual terms in its agreements with smash repairers.
Specifically, it would not require repairers to work exclusively with IAG, prevent them from accepting work from other general insurers or otherwise penalise them for doing so, restrict their ability to provide services to other insurers even where this may be adverse to IAG, or provide materially less favourable terms than current arrangements in relation to the prioritisation of repair work.
In addition, IAG has committed not to own repair service facilities in Western Australia, subject to certain exceptions.
Separately, at a recent Investor Day in Sydney, IAG unveiled a refreshed strategy and new long-term financial targets under its Ambition 2030 plan, which aims to grow the group’s customer base to more than 11 million and lift gross written premium (GWP) above AU$25 billion.
Having successfully delivered on targets set in 2021, IAG said that it is well-positioned to deliver Ambition 2030 and four strategic priorities: Customer Obsession; Insurance Excellence; Future Fit Operations; and Exceptional People.
