The Motor Trades Association of Australia (MTAA) has welcomed the ACCC’s decision to oppose Insurance Australia Group’s (IAG) proposed acquisition of RAC Insurance (RACI) from the Royal Automobile Club of Western Australia.
MTAA Interim Executive Director Peter Jones said the ACCC’s findings reflected concerns long raised by MTAA and its state-based member associations about the risks posed by increasing consolidation in the motor insurance market.
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“We applaud the ACCC for taking a strong and decisive position,” Mr Jones said.
“The regulator has acknowledged what motorists and repairers have been experiencing for years: market consolidation among major insurers is reducing competition, driving up premiums, and narrowing consumer choice.”
The ACCC confirmed that the proposed acquisition would likely result in a substantial lessening of competition in both motor vehicle insurance and home and contents insurance markets in Western Australia.
RACI is the state’s leading insurer and a key competitive force, with the ACCC finding that its removal would leave IAG controlling more than half of the Western Australian motor insurance market, significantly weakening competitive pressure on remaining insurers.
Market diversity
Mr Jones said the decision sends an important signal at a time when consolidation across Australia’s insurance sector is accelerating.
“Already this year, Australia has seen two major acquisitions approved – IAG’s takeover of RACQ Insurance in Queensland and Allianz’s purchase of RAA Insurance in South Australia,” he said.
“If this deal had proceeded, three long-standing member-based insurers would have disappeared in less than 12 months. This is not coincidence; it is a trend.”
MTAA warned that consolidation on this scale poses serious risks not only for consumers, but also for the thousands of independent automotive repair businesses operating across the country.
Preventative pressure
With fewer dominant insurers, bargaining power can become increasingly concentrated, placing pressure on repair rates, encouraging restrictive contractual arrangements and limiting motorists’ ability to choose their preferred repairer.
“The ACCC has rightly recognised that Western Australians—and Australians more broadly—deserve a competitive market with genuine choice,” Mr Jones said.
In response to the broader consolidation pressures highlighted by the ACCC’s decision, MTAA has renewed its call for the introduction of a mandatory national Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct. The association says such a code is needed to establish fair, transparent and consistent rules governing relationships between insurers and repairers nationwide.