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Federal Minister warns RAC sale to IAG could threaten WA's local insurance services

Written by Jon CuthbertPublished jan. 18 2026Last Updated jan. 18 2026

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Federal Resources Minister and Labor MP for Brand, Madeleine King, has raised concerns over the potential sale of RAC Insurance to east coast giant Insurance Australia Group (ASX:IAG), warning it could undermine vital local services for West Australians.

The $1.35 billion deal, initially blocked by the Australian Competition and Consumer Commission in December 2025 on competition grounds, is expected to be reintroduced under a new takeovers regime taking effect this month.

IAG, backed by the RAC motoring mutual, plans to seek approval to acquire the State’s largest general insurer.

King, an RAC member herself, told The Sunday Times she feared IAG may not maintain "local services that are crucial to WA households."

While IAG has pledged to handle claims via a local call centre, King emphasised the importance of local knowledge, citing challenges such as time differences with the East Coast.

The ACCC previously blocked the sale, arguing the merger would significantly reduce competition, giving IAG up to 65% of WA's motor insurance market and 60% of home and contents coverage, potentially driving up premiums.

RAC has defended the sale, citing rising risks from natural disasters, higher reinsurance and repair costs, and the growing challenges of underwriting insurance.

However, brokers and service providers have warned that the deal would concentrate market power and reduce consumer choice.

IAG has confirmed it will lodge a new application under the updated mergers regime, which allows takeovers opposed on competition grounds if public benefits outweigh anti-competitive risks.