The ACCC will not oppose Allianz Australia Insurance Limited's proposed acquisition of the Royal Automobile Association of South Australia's personal insurance business (RAAI).
Allianz and RAAI both supply home and contents insurance and motor insurance products in South Australia.
"Our investigation focused on the closeness of competition between RAAI and Allianz and the extent to which other insurers are competing effectively to supply insurance to South Australians," ACCC Commissioner Dr Philip Williams said.
"We also considered how competitive RAAI is now and is likely to be in the future without being acquired by Allianz. The likely impact of the acquisition on insurance prices, coverage and service offerings were all carefully considered."
The ACCC found that other suppliers will continue to compete with, and constrain, a merged Allianz and RAAI after the acquisition, making the transaction unlikely to substantially lessen competition.
"As well as being the two largest insurers in Australia, Suncorp and IAG also have a significant presence in South Australia. As such, both are likely to compete effectively against Allianz in South Australia even after it has purchased RAAI," Dr Williams said.
"Mid-tier insurers Auto & General (Budget Direct) and Youi are also growing their market share nationally and will continue to compete on price in South Australia."
"While RAAI has a strong brand reputation associated with its motoring club and membership offering, we found that competition in relation to price and coverage in South Australia is being driven predominantly by other insurers, including Suncorp through its AAMI brand, IAG, Auto & General and Youi," Dr Williams said.
The ACCC also considered how the growing challenges facing the insurance industry are affecting RAAI, with a particular focus on the increasing numbers of extreme weather events and rising reinsurance and regulatory costs.
The ACCC's investigation found evidence that RAAI is facing specific challenges meaning that it is likely to be less competitive than it has been in recent years.
The ACCC also considered the impact of the proposed acquisition on markets for the acquisition of smash repair services, windscreen repair and replacement services, and building repair services in South Australia.
The ACCC found that the proposed acquisition is unlikely to substantially lessen competition in these markets as Allianz is unlikely to have the ability to diminish prices or supply terms 2 after the acquisition due to its position in the market relative to other insurers and acquirers of these services.
The ACCC will also shortly be considering IAG's proposed acquisition of RAC Insurance from RAC WA. This decision in relation to Allianz and RAAI should not be treated as being indicative of the ACCC's decision for that transaction. The competitive dynamics and issues in each transaction are unique and the ACCC is considering each transaction individually.
Further information can be found on the ACCC's public register: Allianz Australia Limited - RAA Insurance Holdings Limited.
Background
Allianz Group is a global insurance service provider that offers a range of insurance products to customers in Australia. Allianz distributes personal insurance products (including home and contents insurance and motor insurance) directly to customers under the Allianz and TIO brands.
Allianz also underwrites insurance products and distributes it through agreements with third party brands, including Westpac, BankSA, St George Bank, HSBC, NAB, Aussie, Newcastle Permanent, RAMS, and Catholic Church Insurance.
The Royal Automobile Association of South Australia (RAA) is a South Australian based, member-owned organisation that offers roadside assistance products, personal insurance products, and other ancillary services to its members.
RAAI is a subsidiary of RAA and underwrites home and contents insurance and motor insurance products and distributes them directly through the RAA network via call centres, physical branches (all of which are in South Australia), and the RAA website.
RAAI's insurance products are only available in South Australia. The proposed acquisition does not include RAA's membership-based business, which includes its roadside assistance business.
