The Motor Trades Association of Australia says IAG’s proposed deal with RAC – alongside two similar transactions awaiting clearance – “marks the beginning of the end” for locally owned motoring club insurance.

“These trusted motoring clubs have long stood apart from the major insurers by prioritising members and quality service,” association interim executive director Rod Camm said today.

“If these deals are approved in Queensland, SA and now WA, it will be the nail in the coffin for local motoring club insurance.”

IAG said yesterday it plans to buy the RAC Insurance business in WA and enter a 20-year distribution agreement for home, motor and niche products, in a $1.35 billion deal.

The company announced a similar deal in November with RACQ, and Allianz last year said it planned to buy the insurance business of SA motoring group RAA, with that transaction also involving a long-term distribution arrangement.  

The deals, which keep the motoring club brand names, are subject to regulatory clearance. The Australian Competition and Consumer Commission is due to reveal its views on the RACQ deal next Thursday.

The MTAA is calling on the ACCC to reject the proposals and says that, without intervention, motorists will face less choice and higher premiums. There will be increased pressure on small and independent repairers, and declining service standards and consumer protections, it warns. 

“The agreements could mislead consumers into thinking they were still insured by a local motoring club,” Mr Camm said. “IAG’s announcement it will deliver insurance for RAC pulls the wool over the eyes of Western Australians for the next 20 years.”  

The MTAA and its committee responsible for repairers in February lodged a submission with the ACCC on the previously announced deals.

RAC group CEO Rob Slocombe said yesterday the deal with IAG would strengthen the value the club brings to 1.3 million members across the state.

“IAG brings national scale, global reinsurance capability and industry-leading technology to support RAC members, along with a deep understanding of member focused organisations,” he said.

The transaction is expected to be completed in the first half of next year, subject to regulatory approval.

RAA CEO Nick Reade said last year the partnership with Allianz would enable the motoring group to reduce its exposure to risk and rebuild its balance sheet.

“The driving principle was to develop a long-term model for insurance that was better for our members and our people – and this partnership delivers that,” he said in December.

“RAA is a local insurer, and it’s become increasingly difficult to shield our members from the global challenges in the insurance industry.”