Allianz Australia is targeting the start of next month for completion of its RAA insurance acquisition, after last week gaining clearance from the competition regulator.

“We are pleased to reach this important milestone and look forward to cementing this partnership with RAA,” Allianz MD Richard Feledy said.

The deal cleared by the Australian Competition and Consumer Commission includes a 20-year distribution agreement for RAA home and motor products. About 270 of the South Australian motoring group’s employees will move to Allianz.

RAA CEO Nick Reade says Allianz will underwrite the products, while the deal ensures the brand remains for insurance and there is a strong local presence.

“We believe this partnership with a leading global insurer will deliver more benefits and insurance products for our more than 830,000 members in the future,” he said.

The transaction has also been approved by the Australian Prudential Regulation Authority.

As reported in a Breaking News bulletin last Thursday, the ACCC found other established and mid-tier insurers would provide effective competition to the merged business, while RAA faced rising cost and reinsurance challenges.

“As well as being the two largest insurers in Australia, Suncorp and IAG also have a significant presence in SA,” commissioner Philip 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 SA.”

The commission viewed the deal as being unlikely to substantially reduce competition in repair services, because Allianz is unlikely to be able to diminish prices or supply terms.

The Motor Trades Association of Australia says the approval follows ACCC clearance for the acquisition of RACQ insurance by IAG, which also plans to buy RAC’s underwriting operations in WA.

“Australia is seeing a fast-moving consolidation of its insurance sector, with serious consequences for choice, pricing and accountability,” interim executive director Rod Camm said.

The association has renewed its call for urgent reforms to the Motor Vehicle Insurance and Repair Industry Code of Conduct, and is pushing for stronger enforcement powers, clear penalties and closer regulatory oversight by the ACCC.