The Motor Trades Association of Australia (MTAA) has warned that Insurance Australia Group’s (IAG) proposed acquisition of RAC Insurance could further entrench insurer concentration and reshape conditions in Western Australia’s motor and home insurance and repair markets, as the Australian Competition and Consumer Commission moves the deal to an in‑depth Phase 2 review.
MTAA interim executive director Peter Jones (pictured) said the regulator’s decision to escalate its review reflects concerns that the transaction goes beyond a routine merger and touches on structural issues in both insurance and smash repair markets. “This is not just another merger. The ACCC’s decision to undertake a Phase 2 review confirms that serious competition issues are at play. While we welcome the ACCC’s decision to undertake a detailed review, it is imperative that this merger is ultimately stopped,” Jones said.
MTAA has, for several years, raised issues about increasing market concentration among large general insurers and the way this influences commercial terms for independent repairers. The association says pressures are emerging in pricing, mandated repair methodologies, and contractual conditions. “The reality is that market power doesn’t stop at the insurance policy. It extends directly into how vehicles are repaired, who repairs them, and under what conditions,” Jones said.
According to MTAA, growing insurer scale can narrow the options available to both policyholders and repairers. “When insurers gain too much control, independent repairers are squeezed, consumer choice is diminished, and the quality and safety of repairs can be put at risk,” Jones said. He welcomed the ACCC’s indication that it will also consider effects in related markets such as smash repair services, an area he described as central to MTAA’s membership. “You cannot separate insurance from repair. They are intrinsically linked, and any reduction in competition upstream inevitably impacts outcomes downstream. Without a competitive repair market, consumers face longer wait times, fewer choices, and increasing pressure towards insurer-preferred repair pathways,” he said.
MTAA characterised the proposed deal as part of a broader pattern of consolidation in the general insurance sector and called for the ACCC to assess longer‑term implications for market structure, regional service availability, and the viability of small and medium‑sized automotive businesses. “The stakes here are high. This decision will shape the future structure of Australia’s insurance and repair markets. We strongly support the ACCC taking the time to get this right,” Jones said.
The ACCC has decided that Insurance Australia Group Limited’s (ASX: IAG) proposed acquisition of RAC Insurance (RACI) requires a Phase 2 assessment on the basis that it “could substantially lessen competition” in Western Australia. RACI, owned by the Royal Automobile Club of Western Australia (RAC), underwrites RAC‑branded motor and home and contents policies in the state. Both IAG and RACI currently supply motor and home insurance in WA. If the acquisition proceeds, IAG would underwrite motor and home and contents insurance under the RAC brand.
The commission is also examining the implications of the deal for smash repair services, reflecting the close operational links between personal lines insurers and repair networks. The ACCC has not yet formed a final view and will continue its analysis under the Phase 2 process. Submissions in response to its Phase 2 notice are due by May 4, 2026. Under the formal merger regime that commenced on Jan. 1, 2026, a Phase 2 assessment can run for up to 90 business days, with scope for extensions in defined circumstances.
IAG said it acknowledges the ACCC’s decision to move to Phase 2 and described the development as consistent with the commission’s updated merger control process, which allows a more detailed assessment where early‑stage review raises competition concerns. The group characterised the proposal as an alliance with RAC to provide general insurance products and services to RAC members and the wider Western Australian community and said it will continue to engage with the regulator throughout the extended review. IAG “remains confident in its position and will continue to work constructively with the ACCC throughout this process,” the company said, noting that the Phase 2 assessment is expected to take up to 90 business days, subject to any extensions.
RAC, a WA‑based member‑owned mutual, also issued a brief statement acknowledging the ACCC’s step‑up in scrutiny. “RAC notes the decision by the Australian Competition and Consumer Commission (ACCC) to undertake a Phase 2 assessment of the proposed partnership with IAG. We respect the ACCC process and will continue to work with them throughout their assessment. RAC remains confident in the merits of the partnership, which will ensure we can continue to offer competitive, reliable, and high-quality insurance for current and future generations of members,” RAC said.
