The Australian Competition and Consumer Commission (ACCC) has escalated its review of Insurance Australia Group’s (IAG) A$1.35bn (US$951m) bid for RAC Insurance (RACI) in Western Australia, referring the proposal to a Phase 2 assessment due to ongoing competition concerns.

In its statement issued on the statutory deadline for Phase 1 review, ACCC chair Gina Cass-Gottlieb highlighted that “RACI holds the top market position in WA for both motor and home and contents insurance.” She added, “We consider the acquisition could substantially lessen competition in both the supply of motor vehicle insurance and the supply of home and contents insurance in Western Australia.” The regulator is also assessing potential impacts the deal may have on the local smash repair market.

Under the Competition and Consumer Act, Phase 2 assessments can take up to 90 business days, subject to extension in some circumstances.

IAG, in a statement, confirmed the review development “is in line with the ACCC’s new merger control review process, if the regulator identifies potential concerns as part of its Phase 1 review.” The company reiterated that it “remains confident in its position and will continue to work constructively with the ACCC throughout this process.”

This marks IAG’s second attempt to secure regulatory approval for the transaction, after the ACCC first blocked the deal in December 2025 under the previous informal regime, warning that it could lead to increased premiums and reduced product quality, as well as negative implications for competitors such as Suncorp, Allianz and QBE. IAG refiled its application in March 2026 under Australia’s new mergers and acquisitions rules, which took effect on 1 January.

The proposed deal would see IAG acquire 100% of RACI and agree a 20-year exclusive distribution deal for RAC-branded insurance. Recent ACCC estimates suggest the combined entity could control around 55%–65% of the WA motor market, and 50%–60% in home and contents.