The Australian Competition and Consumer Commission has escalated its scrutiny of Insurance Australia Group's (ASX:IAG) proposed acquisition of RAC Insurance, announcing that the deal now requires an in-depth Phase 2 assessment.
The regulator expressed concerns that the merger could "substantially lessen competition" within the Western Australian insurance market, where both entities are dominant players.
RACI, currently owned by the Royal Automobile Club of Western Australia, is the state's market leader in both motor vehicle and home and contents insurance.
Under the proposed deal, IAG would take over the underwriting of these products while maintaining the RAC brand.
ACCC Chair Gina Cass-Gottlieb emphasised that the acquisition would combine two of Western Australia’s largest insurers, potentially reducing consumer choice and driving up premiums.
Beyond direct insurance products, the commission is also investigating how the consolidation might impact the smash repair services sector.
IAG initially applied for clearance in 2025 under the previous informal merger regime but was blocked in December.
Following the introduction of a new formal merger regime on Jan. 1, IAG re-notified the regulator, leading to this current Phase 2 review.
The ACCC has not yet reached a final conclusion and is inviting submissions from interested parties until May 4.
For IAG—which operates major brands including NRMA, Swann, and ROLLiN’—the outcome of this review will be critical to its expansion strategy in the Western Australian market.
At the time of reporting, Insurance Australia Group’s share price was $7.41.