The Statement of Issues is the first consummated step in the proceeding process of the ACCC since it started looking into the IAG-RAC strategic alliance. The Regulator has laid out pre-emptive concerns of less competition in the home and motor insurance markets of Western Australia.
Under the deal, Insurance Australia Group (IAG) shall underwrite the RAC’s home and motor insurance policies in Western Australia. The ACCC views the Alliance in forming the view that it could well result in increased premiums and fewer competitive choices for purchasers in Western Australia.
RAC Insurance also enjoys a reputable market position due to brand strength and member loyalty. Eliminating it as an independent competitor would hurt consumer choice and rivalry.
ACCC issues Statement of Issues, raising competition concerns over IAG-RAC WA insurance alliance
Will premiums rise and service quality fall?
The ACCC Statement of Issues highlight possible price increases if the alliance proceeds without safeguards. Less competition may give IAG leverage to hike up insurance premiums in Western Australia.
Consumers might end up experiencing less service quality due to less competition. Therefore, the ACCC is concerned about the long-run impact on affordability and service standards for households.
It notes that competition from RAC Insurance has historically placed pressure on larger insurers to keep premiums lower. If this pressure is removed, the market could shift in favour of the dominant players.
What about access to repair services?
Another angle concerns access to repair networks and supply chains. The ACCC fears IAG could deny access to repair services for its competitor insurers, thereby raising costs for the smaller competitors.
Such restrictions could make it difficult for other insurers to offer cover at affordable rates in Western Australia. The regulator also observed that vertical integration might threaten the ability of independent repairers to access customers.
Lower competition for repair services may increase prices and reduce waiting time for policyholders. Therefore, the problem essentially brings to light certain risks to market concentration in both the insurance and vehicle repair industries.
The ACCC Statement of Issues is not final
The regulator has emphasised that its proof-of-concept statement merely constitutes preliminary views. The ACCC Statement of Issues is meant to invite further submissions and test the evidence.
It does not, however, represent the ACCC’s final decision concerning the transaction. The process is now entering a consultation stage where stakeholders can provide submissions on the potential impact.
That stage allows for transparency and will provide consumers, industry groups, and competitors with a chance to place evidence on record. The final decision may shift based on the responses and further analysis by ACCC.
ACCC warns IAG may block competitor access to repair services, raising their costs
IAG continues to engage with the ACCC
IAG recognises the concerns of regulators. The company said it remains engaged with the through the review processes.
Through dialogue and information sharing, IAG hopes to address some of the issues raised in the Statement of Issues. The group expressed that it was confident the alliance would be able to provide long-term benefits to RAC members.
These would include enhanced underwriting support and the wider insurance expertise of IAG. IAG emphasised, too, that road assistance or any other non-insurance operation of RAC is not part of the proposed alliance.
Final decision expected on 27 November
The it has set 27 November 2025 as the date for the making of its final decision. This deadline fits with having enough time for further analysis and public consultations.
The decision will thus be key for IAG and the rest of the insurance market in Western Australia. If the alliancism stands, it might reshape the face of insurance in the State by bringing together the major providers.
If the alliance gets blocked, IAG and RAC might need to revisit their strategic plans. Either way, the decision will serve as a notable precedent for competition policy in Australia’s financial services sector.
Background on the IAG RAC strategic alliance
The IAG-RAC Strategic Alliance will see IAG acquiring the underwriting rights for RAC’s home and motor insurance business. RAC will carry on with customer service and policy distribution through its trusted brand.
This arrangement, however, does not cover RAC’s roadside assistance, travel, finance, auto servicing, and other non-insurance operations. The alliance is part of an IAG strategy to resume its foothold in Western Australia.
For RAC, it means funding support and a reduction of exposure to insurance risk. However, the ACCC warned that this deal risks a squeeze in consumer choice in a market already concentrated.
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FAQs
- What is the Statement of Issues?
It is a preliminary report outlining the it’s concerns with respect to competition. It is not a final decision.
- Why is the concerned with the IAG RAC Strategic Alliance?
The regulator fears that the arrangement, if successful, could reduce competition in market premiums and access to repair services in WA.
- Has the its approved the deal yet?
No. A final decision is due on 27 November 2025 after further consultations and review.
- What has IAG said about the update?
IAG has stated that it acknowledges the concerns and continues to engage the regulator.
