IAG’s bid to buy Lumley from Wesfarmers will add significant risk to the New Zealand market, Tower Chairman Michael Stiassny says.

The proposed acquisition has attracted more attention in New Zealand than in Australia, with Mr Stiassny’s comments at last week’s Tower AGM following warnings from other commentators and brokers who fear IAG will gain too much control of the market.

“We are pleased the Commerce Commission is taking a close look at the proposed [deal], given the implications for New Zealand, the insurance industry and consumers,” said Mr Stiassny, a partner with law firm KordaMentha New Zealand.

“We believe there is significant risk from one business controlling two-thirds of the personal lines market, if New Zealand was to suffer another event on the scale of [the Canterbury earthquakes].”

Regulators in Australia and New Zealand will decide in late March whether to approve the acquisition after considering its impact on competition.

IAG would become both countries’ largest insurer, but it told New Zealand’s Commerce Commission the merged entity would still face strong competition and it is relatively easy for an insurer to expand into the market.

The commission has invited submissions on the proposal by February 21 and will make a decision by March 28.

The Australian Competition and Consumer Commission took submissions until last Monday and expects to announce a final decision or release a statement of issues on March 27.