WA's biggest insurer in sights of IAG after insurance giant snares Queensland RAC
Australia's competition umpire won't stand in the way of IAG's move to buy RAC Queensland in a decision that could clear the way for the behemoth to take control of WA's biggest general insurer.
The Australian Competition and Consumer Commission on Thursday ruled there were enough home, contents and motor insurance providers on the market to keep IAG on its toes and it would not further probe its planned $855 million acquisition of the Royal Automobile Club of Queensland's underwriting business.
ACCC chair Gina Cass-Gottlieb said the likes of Suncorp, Allianz, QBE, and newer entrants such as Youi, Auto & General, and Hollard meant there was still plenty of competition in the Sunshine State.
'While RACQI has strong brand recognition in Queensland, our review found that it does not differentiate in terms of price or coverage,' Ms Cass-Gottlieb said.
But the watchdog said its decision on the deal was in no way a curtain-raiser for what happens with IAG's concurrent proposal to buy RACWA's insurance arm.
The ASX-lister is proposing to buy Perth-based RAC Insurance for $400 million and make an upfront payment of $950 million to RACWA for a 20-year exclusive distribution and brand licensing agreement.
The $1.35 billion sale could hand more than 55 per cent of WA's insurance market share to the Sydney-based outfit, analysts at UBS have estimated. WA-based claims staff, who will sell home and motor policies developed and underwritten by IAG, will get to keep their jobs for at least two years.
The Motor Trades Association of Australia lamented IAG's move on the homegrown WA business as 'the beginning of the end for locally owned, motoring club-based insurance in Australia.'
RAC's in WA and Queensland are not the only players in the eyes of big insurers, with the ACCC also juggling a review of Allianz'a pursuit of Royal Automobile Association of South Australia's insurance arm.
'If these deals are approved . . . it will be the nail in the coffin for local motoring club insurance,' MTAA interim executive director Rod Camm said when the WA deal was announced last week.
'The agreements could mislead consumers into thinking they were still insured by a local motoring club, IAG's announcement it will deliver insurance for RACWA pulls the wool over the eyes of Western Australians for the next 20 years.'
The group is urging the ACCC to reject the proposals, claiming consumers will be left with less choice and higher premiums.
On the back of
a booming year
, the RAC in WA called in investment banking firm Barrenjoey at the end of 2024 to size up the business.
An RAC spokesman confirmed at the time that a 'strategic review' of its insurance business was under way, saying the group was 'constantly looking for ways to improve our member experience and the services we provide, including insurance.'
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