The Insurance Australia Group Ltd (ASX:IAG) share price is in focus today after the ACCC made a decision on whether the acquisition of RAC’s insurance arm can go ahead.
Insurance Australia group (IAG) is the parent company of multiple well-known insurance companies in Australia and New Zealand. Its brands include NRMA Insurance, CGU, WFI, State and Lumley. IAG underwrites over $17 billion of premium each year.
ACCC decides if IAG can acquire RAC’s insurance division
IAG announced in May 2025 that it was planning to acquire RAC Insurance (RACI) from The Royal Automobile Club of Western Australia (RAC), subject to regulatory approvals.
In September 2025 concerns were raised by the Australian Competition and Consumer Commission (ACCC) about the acquisition. The ACCC said it was concerned that the acquisition would increase concentration in an already highly concentrated market.
Today, the ACCC made its decision official and opposed IAG’s acquisition of RAC’s insurance division.
The ACCC said that it conducted a detailed investigation and concluded that “the proposed acquisition would likely result in a substantial lessening of competition in the supply of motor vehicle insurance and the supply of home and contents insurance in Western Australia”.
The regulator highlighted that the proposed acquisition combining these two large insurers would give IAG an overall market share of around 55% to 65% in motor vehicle insurance for Western Australia. Likewise, in home and contents insurance the market share in WA would be approximately 50% to 60%.
ACCC Chair Gina Cass-Gottlieb said:
We concluded that the acquisition would be likely to allow IAG, after acquiring RACI, to increase premiums and reduce the quality of its suite of insurance products, with likely flow on effects to the offerings of other insurers.
Given the historical difficulties rivals have had growing their share in Western Australia, the ACCC is concerned that IAG would face insufficient competitive constraints post-acquisition.
Our investigation found that RACI remains a strong and profitable competitor and is adequately positioned to manage these challenges. We have concluded that if IAG doesn’t acquire RACI, RACI would have the capability to continue to compete effectively in Western Australia in the future.
IAG responds to ACCC decision
Insurance Australia Group said that it acknowledges the ACCC’s decision to oppose the acquisition.
However, IAG isn’t walking away just yet and said it now intends to lodge an application with the ACCC for “assessment of the alliance under the new mandatory merger control regime, which will take effect on 1 January 2026”.
IAG Managing Director and CEO Nick Hawkins said:
IAG and RAC have proven track records of successful partnerships and are committed to delivering competitive and accessible insurance products for all Western Australians.
As part of the alliance we have committed to staying local, investing in enhancements to the RAC member experience and continuing to deliver high quality and competitive insurance products and services. This would be made possible by our position as a national insurer, investment in technology capabilities and strong capital management.
Together, we would also continue to invest in initiatives that support local communities and provide benefits to RAC, its members and Western Australia.
Final thoughts on the Insurance Australia Group share price
Given that the ACCC provided an update in September citing concerns about the acquisition, it hasn’t been a surprise to the market that the proposal was rejected.
IAG also hasn’t quite given up, it remains to be seen how the second application will go after 1 January 2026.
The Insurance Australia Group share price is down only slightly, though considering that the ASX 200 (ASX: XJO) has risen around 1% after the US Fed cut interest rates this morning, that is noticeable gap between IAG and the market’s rise today.
The Insurance Australia Group share price is down around 14% from its 2025 high, but it’s up 50% in the last five years.
I don’t think that it’s an appealing buy at this price, IAG is not getting the boost from inflation flowing onto increasing premiums like it was a couple of years ago. There are other ASX dividend shares I’d buy first.
