IAG's Acquisition of RACQ Underwriting Unit Draws ACCC Scrutiny

The Australian Competition and Consumer Commission (ACCC) has raised concerns over IAG's deal to buy 90% of RACQ's insurance underwriting business. The regulator is assessing the potential impact on the insurance market, particularly in personal lines general insurance and ancillary repair services, and has requested interested parties to submit their views by February 14, 2025. The ACCC is concerned that the merger could lead to less competition, resulting in higher prices or lower service quality for consumers. IAG is a leading insurance provider in Australia, offering a range of personal and commercial insurance products through its owned brands. RACQ is a member-owned organisation based in Queensland, offering services such as roadside assistance, insurance, banking, and community support.

The Australian Competition and Consumer Commission (ACCC) has expressed concerns over Insurance Australia Group's (IAG) proposed acquisition of 90% of the Royal Automobile Club of Queensland's (RACQ) insurance underwriting business [1]. The regulator is assessing the potential impact of this merger on the insurance market, particularly in personal lines general insurance and ancillary repair services.

The ACCC's concerns stem from the possibility that the merger could result in less competition, leading to higher prices or lower service quality for consumers [1]. IAG is a leading insurance provider in Australia, offering a range of personal and commercial insurance products through its owned brands. RACQ, on the other hand, is a member-owned organization based in Queensland, providing services such as roadside assistance, insurance, banking, and community support.

The ACCC's concerns come at a time when the Australian government is proposing a new competition regulation regime for digital platforms operating in Australia [2]. This regime aims to address concerns that Australia's existing competition law framework may be inadequate to regulate digital platform markets. The proposed regime introduces a process for digital platforms to be designated based on certain quantitative and qualitative factors, and once designated, they would be subject to both general and service-specific obligations.

The general obligations would target anti-competitive conduct that the ACCC has previously identified as common across digital platform services, such as self-preferencing, tying, and unfair treatment of users. Service-specific obligations would apply to specific digital services, such as app marketplaces and ad tech services.

The ACCC has requested interested parties to submit their views on the proposed acquisition by February 14, 2025 [1]. The regulator's concerns highlight the importance of maintaining competition in the insurance market, particularly in the digital age.

References:
[1] JWS. (2023, January 26). IAG's Proposed Acquisition of RACQ's Insurance Business Raises ACCC Concerns. Retrieved from https://jws.com.au/what-we-think/iags-proposed-acquisition-of-racqs-insurance-business-raises-accc-concerns/
[2] Australian Government. (2023, January 18). Competition Regulation for Digital Platforms. Retrieved from https://www.business.gov.au/regulation/competition-regulation/competition-regulation-for-digital-platforms