Insurance Australia Group’s proposed acquisition of RAC Insurance has progressed to a detailed Phase 2 review by the Australian Competition and Consumer Commission, following the regulator’s determination that the deal could substantially lessen competition in Western Australia. The ACCC’s decision to escalate the merger review represents a significant hurdle for IAG’s strategy to consolidate its position in the WA insurance market, particularly given the regulator’s initial refusal to clear the acquisition under the previous informal merger regime in December 2025.
The competition concerns identified by the ACCC centre on the combination of two major WA insurers. RAC Insurance is the market leader in both motor vehicle insurance and home and contents insurance across Western Australia, while IAG already operates substantially in both segments through its NRMA brand. The proposed transaction would see IAG underwrite insurance under the RAC brand, effectively combining competing operations. ACCC Chair Gina Cass-Gottlieb’s statement that the acquisition “would combine two of the biggest insurers in WA” underscores the structural competition issues at stake, with the regulator also examining potential impacts on the smash repair services sector.
For IAG shareholders, the Phase 2 review creates meaningful uncertainty around timing and deal completion. The ACCC has up to 90 business days to reach a decision under the formal merger regime that commenced on 1 January 2026, though this period can be extended under specific circumstances. The submission deadline of 4 May 2026 suggests the regulator will undertake substantial further investigation. The initial rejection under the previous informal regime followed by re-notification under the new formal regime indicates the ACCC takes these competition concerns seriously enough to warrant deeper scrutiny.
The scope of the proposed acquisition is notable. IAG would acquire only RAC Insurance’s underwriting business, not the RAC brand’s broader operations including roadside assistance, auto servicing, repair services, finance, retirement living, home security and travel operations. This structured approach may provide limited comfort to competition authorities, given that the insurance underwriting operations represent the most direct competitive overlap between the two entities.
Investors should monitor several key developments. The May 2026 submission deadline will likely attract submissions from consumer groups, competitor insurers, and potentially RAC members expressing concerns or support. The phase two process will generate detailed market analysis regarding competitive dynamics in WA insurance and repair services. Any indication from the ACCC regarding clearance conditions or potential divestiture requirements could materialise before the 90-business day review period concludes.
The approval pathway remains uncertain at this stage, with the ACCC’s explicit statement that it has not reached conclusions on the issues signalling genuine competition concerns rather than procedural requirements. Investors should factor in the possibility of conditional approval, extended timelines, or rejection as the review progresses. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Insurance Australia Group Limited (ASX: IAG)
Insurance Australia Group Limited is the largest general insurance company operating in Australia and New Zealand. The company provides a range of personal and commercial insurance products, primarily motor vehicle and home insurance, selling insurance under many brands including NRMA, CGU, SGIO, and SGIC in Australia and NZI, State, AMI, and Lumley in New Zealand. Headquartered in Sydney, IAG underwrite over 14 billion dollars of premium per annum.
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