What insurance giant’s $855m deal for RACQ means for you
Insurance Australia Group will acquire 90 per cent of RACQ’s underwriting business in a huge “long-term alliance”. Here’s how it will impact you.
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Insurance Australia Group will acquire 90 per cent of Queensland insurer RACQ’s underwriting business in a 25-year “long-term alliance”.
IAG will have an option to snap up the remaining 10 per cent under an option in two years “on consistent terms”.
The $855m deal sees IAG secure a large chunk of RACQ’s 1.7 million customers, coming after months of speculation over the future of the Queensland insurer.
IAG will pay an upfront $333m plus a further $522m at the completion of the deal. RACQ will add $1.3bn in gross written premium to IAG’s book.
IAG said it would book $50m in synergies from the deal.
The new deal means IAG will be responsible for underwriting, claims management, product and pricing, while RACQ will support the business through marketing, and sales and distribution channels including online, in store and via the locally based call centre.
As part of the deal, the 800 staff members employed with RACQ Insurance will join IAG in Queensland on completion of the transaction.
RACQ managing director and group chief executive David Carter said the partnership brings together the best of RACQ and IAG.
“We’re very excited to announce the start of a really important partnership for RACQ and for IAG, as we look to a strategic partnership around our RACQ insurance business,” Mr Carter said.
“We think this is fantastic for our members who trust us with their insurance needs.
“One of the big areas of focus for us as an organisation has been on the long term access to affordable insurance for Queenslanders.
“We think by partnering with IAG, the leading insurers in this country, and the capabilities they can bring, that gives us the best opportunity to achieve that outcome, which we’re very, very focused on.”
IAG managing director and chief executive Nick Hawkins hailed the new alliance with RACQ, which will build on IAG’s ability to provide leading insurance products to Queenslanders.
“We’re pretty excited about this, this is an iconic brand, RACQ, that has 1.7 million members in a fast growing, exciting part of Australia,” Mr Hawkins said.
“The opportunity for IAG to partner with that, and the 25 year arrangement we’ve announced today, it’s a big day for IAG, and exciting that we get to partner with an organisation like this.
“What we see is obviously an opportunity to engage with those 1.7 million members through this terrific brand.
“What we bring is insurance capability, balance sheet strength, we’ve got a capital structure, which we will be able to utilize and engage with RACQ insurance and provide the benefit of that to members here in Queensland.”
What the deal means for Queenslanders
If you are an existing member of RACQ Insurance, this is what the new $855m deal between RACQ and IAG means for you.
According to RACQ, existing insurance policies will remain unchanged, with the transition expected to take time, while it is subject to regulatory approvals.
As per the standard renewal process, RACQ Insurance policy holders will receive notification via their preferred method of communication with information on how to renew their policy and details of any changes to their policy, including an update on the transition to IAG.
If you are an RACQ Insurance member with an existing claim, policy holders are assured that the partnership will not compromise or cause any delays for any claims underway.
In terms of membership status, RACQ Insurance members can be assured that their existing membership status remains unchanged, and will continue to have access to all the benefits available for RACQ members.
The partnership between RACQ and IAG only relates to RACQ Insurance and does not impact on other parts of the business including Roadside Assistance, RACQ Bank, RACQ Solar and joint venture travel arrangement with Members Travel Group (MTG).
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