The Australian Competition and Consumer Commission has pushed back its highly anticipated verdict on the controversial $1.35 billion sale of RAC Insurance to Insurance Australia Group, creating further uncertainty for Western Australia's insurance landscape.
Regulatory Delay and Revised Timeline
In a move revealed on its official website, the ACCC announced it would delay its final decision by two weeks until December 11. The regulator stated it needed additional time to "consider further information provided by the merger parties" as both RAC and ASX-listed IAG attempt to salvage the massive deal.
This represents the second significant postponement in the approval process after the ACCC initially raised serious competition concerns back in September. At that time, the regulator extended the approval timeline by ten weeks to consult more extensively with market participants about the proposed acquisition.
Market Dominance Concerns
The core issue troubling regulators stems from the combined entity's potential market power. RAC Insurance currently commands a dominant 55 per cent share of Western Australia's motor insurance market and approximately 35 per cent of the home and contents insurance sector.
Should the acquisition proceed, the ACCC fears IAG would control between 60 and 70 per cent of WA's motor insurance and 50 to 60 per cent of the home and contents market. This concentration of market power could potentially allow IAG to "profitably increase the prices and/or reduce the service quality" of insurance products across the state.
The regulator's September statement of concerns highlighted that the merger would create an entity "considerably larger" than any competitor in Western Australia.
Financial Stakes and Potential Outcomes
The proposed deal carries significant financial implications for both parties. Under the agreement, RAC would receive $400 million from the immediate sale of its insurance business, plus an additional $950 million over twenty years through branded insurance products distributed via IAG.
Ironically, the insurance division that RAC seeks to divest propelled the organisation to a record $254.2 million net profit in the 2025 financial year, more than doubling previous results as insurance revenue jumped 21 per cent.
While RAC's public statements suggest confidence in overcoming regulatory hurdles, insurance analysts believe the deal faces potential blocking unless IAG offers to divest its existing WA operations to address competition concerns.
The ACCC has emphasised that the acquisition would "increase concentration in an already highly concentrated market" and potentially give IAG excessive influence over repair services, particularly in smash repair and windscreen replacement, which could disadvantage rival insurers.
