IAG and Allianz’s plans to take over motor club insurance operations are under scrutiny by the competition watchdog, which is canvassing the market about the potential impacts on pricing and smash repair services.

IAG announced its $855 million deal to acquire 90% of the RACQ insurance underwriting business in November.

A few days after that, Allianz Australia said it had struck a $642 million agreement with SA-based RAA.

Equity analysts said the regulator would take a close look at listed company IAG’s expansion in Queensland, where RACQ ranks second in the personal lines markets. 

Now, the Australian Competition and Consumer Commission has begun its market inquiries into the deals, calling for submissions by February 14. It will make final decisions or release statements of issues outlining concerns on April 24.

“IAG and RACQI both provide personal lines general insurance, including home, contents and motor vehicle insurance, and acquire ancillary repair services, including smash repair services, windscreen repair and replacement services, and building repair services,” the Australian Competition and Consumer Commission says.

The ACCC inquiry seeks views on how closely the two compete, the extent to which alternative suppliers will “competitively constrain” the merged entity, the likely impact on prices and quality of personal lines products, and the effect of IAG’s increased scale on the acquisition of ancillary repair services, including price or supply term impacts.

The regulator say Allianz and RAA overlap in the supply of personal lines cover, including home, contents and motor insurance, and it has put forward similar questions for feedback.

The ACCC’s list of questions seeks input on whether Queensland and SA should be considered separate geographic markets and whether the insurers involved have a reputation for being low-price, innovative or aggressive competitors.

It also asks for details on market shares, broken down by line if possible, “recent or upcoming” examples of personal lines market entries or exits, and barriers to entry.

More information is available here.