RACWA drops bombshell with $1.35b deal to sell insurance business and enter 20-year IAG partnership
The Royal Automobile Club of WA will sell off its insurance business and enter into a decades-long partnership with Australia's biggest insurance group in a deal worth more than $1.3 billion as it battles a rising number of claims and increasing regulation.
RACWA will collect $400 million from the sale of RAC Insurance and a further $950m under a 20-year exclusive distribution agreement covering its branded home, motor and niche insurance products.
The terms of the deal with IAG were revealed on Thursday, with RAC saying the biggest shake-up in the WA motoring mutual's 120-year history was borne from an increasingly complex regulatory environment, higher claims volumes and expenses, and rising reinsurance costs.
It was also being required to hold larger capital reserves for claims and natural disasters.
RAC will continue to distribute general insurance products under the RAC Insurance brand while IAG will take on underwriting, claims management, product development and pricing.
Chief executive Rob Slocombe said the deal with IAG — which also operates NRMA Insurance, CGU and WFI — would give RACWA national scale, global reinsurance capability and leading technology to support its 1.3 million members.
'They have the experience needed to manage increasing volatility and improve the insurance products and services we provide,' Mr Slocombe said.
'This will also enable us to continue to invest in member services, advocacy and community initiatives.
'As a result of this partnership with IAG, we will continue to work together to ensure all RAC members have access to leading insurance products and an excellent claims experience.'
'The partnership will support RAC to deliver for our members, employees, and all Western Australians through continued access to innovative insurance products and services provided locally under the RAC brand, to safeguard their future for years to come.'
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