IAG offers commitments to secure ACCC approval of RAC alliance
Insurance Australia Group (IAG) responded on 14 October 2026 to competition concerns raised by the Australian Competition and Consumer Commission (ACCC) with a range of measures and commitments. IAG is seeking a determination that its proposed alliance with the Royal Automobile Club of Western Australia (RAC) be allowed because it will result in a net public benefit.
The RAC alliance follows a strategic review of RAC’s insurance business. In May 2025, RAC announced a 20-year general insurance partnership with IAG, subject to approvals.
The public benefits phase is expected to be completed in December 2026, subject to any extensions. The regulatory path to the alliance is now being actively addressed.
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The commitments on the table
Four measures offered
IAG’s commitments include the following:
- Transferring the renewal rights for active NRMA Insurance home and motor policies in Western Australia to another insurer through a sale process.
- Addressing the availability of RAC home insurance products in the north of the state (above the 26th parallel in mainland Western Australia, including the communities of Karratha, Port Hedland and Broome), where there is currently limited insurance availability.
- Investing $20m to further support community resilience-building initiatives in Western Australia over the next decade, in addition to RAC’s existing community investment program.
- Stronger measures if IAG breaches requirements in relation to product pricing and competitiveness of the RAC-branded insurance offering.
IAG noted that these measures are dependent on the alliance being approved and completed.
The ACCC’s competition decision found the combined entity would hold roughly 55-65% of Western Australian motor insurance, which is the concentration concern the renewal rights transfer is designed to address.
Public benefits claimed
IAG stated the alliance will deliver substantial public benefits to Western Australia, including:
- Broader claims handling expertise
- Major natural peril event response capacity
- Leading technology
- Access to global reinsurance and capital markets
IAG said these benefits provide the “financial, technological and prudential resilience” that RAC has been seeking through its strategy to partner with a leading insurer.
Nick Hawkins, Managing Director and CEO, IAG
“In light of our commitment to RAC and its members, and in response to the ACCC’s competition decision, we are offering to transfer renewal rights for our active NRMA Insurance home and motor insurance policies in Western Australia to another insurer.”
Hawkins said IAG has offered further commitments to address the ACCC’s concerns and secure the public benefits of the proposed alliance.
Financial rationale unchanged
IAG confirmed that the remedies and public benefits commitments do not alter the transaction’s underlying strategic or financial rationale. The expected financial implications remain consistent with those outlined when the alliance was announced in May 2025.
| Metric | Detail |
|---|---|
| Net additional annual gross written premium (RAC alliance plus transfer of NRMA Insurance WA home and motor policies) | $1.2bn |
| Earnings per share (EPS) | Expected to be accretive in the first full year of ownership; mid-single digit accretive on a full synergy run-rate basis |
| Annual integration costs | Between $15m and $25m over the next three years (as previously disclosed) |
| Annual pre-tax synergies once integration is complete | Approximately $100m |
The $1.2bn is a net figure covering both the alliance and the transfer of the policies. For investors, the remedies appear to be absorbed without a change to the stated earnings case.
Understanding ACCC merger control and the public benefits phase
The ACCC is Australia’s competition regulator. Under its merger control regime, it reviews proposed acquisitions and arrangements for their effect on competition.
Where competition concerns remain, a party can seek a determination that the proposed deal be allowed because it will result in a net public benefit. This is the route IAG is now following, and it is currently in the public benefits phase.
The process matters because it sits between announcement and completion of the alliance. The measures IAG has offered are dependent on the alliance being approved and completed.
Strategic fit and what’s next
IAG stated the RAC alliance is consistent with its Ambition 2030 targets of a sustainable 15% plus reported insurance margin and 15% return on equity.
A summary of IAG’s public benefits application will be available on the ACCC website. The public benefits phase is expected to be completed in December 2026, subject to any extensions.
Hawkins also commented on the partnership with RAC:
Nick Hawkins, Managing Director and CEO, IAG
“RAC is a wonderful organisation with a much-loved brand. RAC has chosen to partner with IAG to ensure its insurance offering to members is sustainable into the future, benefiting from our scale, technology and global reinsurance arrangements…”
IAG is the parent company of a general insurance group with operations in Australia and New Zealand. Its main businesses underwrite over $18 billion of insurance premium per annum under many leading brands, including NRMA Insurance, CGU and WFI in Australia.
For readers wanting to see how the RAC deal fits the broader plan, our full explainer on IAG’s Ambition 2030 strategy sets out the 11 million customer and $25 billion premium targets and the AI and reinsurance levers behind them.
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