The Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the proposed acquisition of RACQ Insurance Limited (RACQI) by Insurance Australia Group Limited (IAG). Both companies provide general insurance products, including home and contents insurance and motor insurance, with a significant overlap in the Queensland market.

In its review, the ACCC assessed the potential impact of the acquisition on competition in the home and contents insurance and motor insurance sectors. The authority focused on the competitive landscape, evaluating the strength of existing competitors and the current market position of RACQI. The ACCC concluded that other insurance providers, such as Suncorp, Allianz, QBE, and newer entrants like Youi and Auto & General, would continue to exert competitive pressure on IAG post-acquisition.

Despite RACQI's strong brand recognition in Queensland, the ACCC found that it has not been a vigorous competitor recently, losing market share since 2019. The review indicated that RACQI's pricing is generally higher than that of its competitors, and it does not offer significant differentiation in terms of coverage or service.

The ACCC also considered the challenges faced by RACQI, including the impact of extreme weather events and rising costs in the insurance industry. These factors have limited RACQI's ability to compete effectively, particularly in high-risk areas. The authority determined that the acquisition would not substantially lessen competition in related markets, such as smash repair and building repair services.

It is important to note that the ACCC is also reviewing other proposed acquisitions in the insurance sector, including Allianz's acquisition of RAA Insurance Holdings. The decision regarding IAG and RACQ should not be seen as a precedent for these other transactions, as each case has unique competitive dynamics.