Australia’s insurance sector is under a microscope, and the United States’ health insurance market is facing its own reckoning. Over the past week, two major stories have illuminated the challenges and controversies swirling around insurance giants in both countries. In Australia, the proposed $1.35 billion acquisition of RAC Insurance by Insurance Australia Group (IAG) has triggered alarm bells at the Australian Competition and Consumer Commission (ACCC), which fears the deal could further concentrate an already tightly held market. Meanwhile, in the United States, a provocative opinion piece has reignited debate over whether insurance itself—especially the employer-based model—actually restricts access to healthcare, rather than improving it.
Let’s start in Australia, where the ACCC’s concerns over IAG’s planned purchase of RAC Insurance have become front-page news. The general insurance sector there is big business: gross written premiums reached an impressive $68.0 billion in 2024, with the market dominated by just a few major players. According to IBISWorld, IAG alone reported revenue of $14,517.3 million in 2025, with Suncorp and QBE Insurance not far behind at $13,336.0 million and $8,036.9 million, respectively. This level of concentration is noteworthy—especially when compared to the health insurance sector, where the top five providers control more than 80% of the market, as reported by Fair Healthcare.
RAC Insurance, once a regional powerhouse, has been on a tear. By 2024, it had grown its national market share from roughly 35% in 2019 to a remarkable 50%. In Western Australia (WA), RAC’s dominance is even more pronounced: it commands 55% of the motor insurance market and 34% of the home and contents segment. This rapid expansion, fueled by aggressive pricing and a focus on member-centric service, made RAC a formidable competitor—so much so that IAG’s bid to acquire it has regulators deeply uneasy.
Why all the fuss? The ACCC has made its position clear. The regulator worries that the merger could “substantially lessen competition,” especially in WA’s motor and home insurance markets. Analysts cited by Insurance News point out that, unlike IAG’s earlier acquisition of RACQ Insurance in Queensland (which the ACCC approved, given RACQ’s declining market share), the RAC deal presents a much bigger threat to competitive dynamics. In WA, geographic isolation and limited cross-border competition mean that any further consolidation could leave consumers with fewer choices and potentially higher prices.
The ACCC isn’t just wringing its hands behind closed doors. It has invited public submissions on the proposed deal until July 2, 2025, making clear that its final decision will hinge on whether the acquisition is likely to result in higher premiums, reduced service quality, or diminished innovation. If the watchdog blocks the deal or attaches tough conditions, IAG could face not only reputational damage but also the risk of losing its $1.35 billion investment—a significant strategic setback.
For investors, the stakes are high. On one hand, the acquisition aligns with IAG’s long-term plan to expand its regional footprint and tap into RAC’s formidable distribution network. On the other, it exposes the company to regulatory risks and the possibility of antitrust penalties. According to a 2025 KPMG report, Australia’s general insurance market is projected to grow at a compound annual rate of 8.8%, reaching $93.9 billion in direct written premiums by 2029. But that rosy outlook could be clouded if the ACCC’s intervention limits IAG’s ability to realize the expected synergies from the RAC purchase.
Zooming out, the IAG-RAC saga highlights a broader tension in Australia’s insurance landscape: the push and pull between corporate growth and consumer protection. As the sector edges closer to the kind of high concentration seen in health insurance, questions about market power, pricing, and innovation are only getting louder. The outcome of the ACCC’s review will be a pivotal moment—not just for IAG and RAC, but for the future shape of the industry itself.
Meanwhile, across the Pacific, a different but related debate is raging. In the United States, an opinion piece published on September 3, 2025, has sparked fierce discussion about the very nature of health insurance. The author, Micah Moughon, pulls no punches in his critique of the employer-based insurance model, arguing that it “stifles competition and leads to consolidation among pharmacies and physician practices.”
Moughon’s argument is rooted in personal experience—he recalls volunteering at a nonprofit healthcare clinic and witnessing firsthand how medical expenses can devastate families. But his critique goes further, taking aim at the structural incentives that, he claims, drive up costs for everyone. “There is a simple reason healthcare is expensive: Millions of executives, investors, providers and nonprofits are financially rewarded for increasing healthcare spending,” he writes.
The numbers are sobering. As of 2025, the average cost of a family health insurance plan in the US is $25,500—double what it was in 2008. The average family deductible now stands at $3,700, yet most Americans can’t afford a $1,000 emergency expense. Health insurance costs are projected to rise another 8-9% this year, driven by what Moughon describes as four major market distortions.
First, health insurance covers both routine and catastrophic events, which, according to Moughon, makes it less efficient—much like if car insurance paid for oil changes as well as collisions. Second, insurance companies operate on fixed profit margins, meaning they have little incentive to control costs. Third, insurers have become providers themselves: UnitedHealthcare, for example, is now the largest physician employer and the third largest pharmaceutical distributor in the country. “It also pays a quarter of all its claims to itself,” Moughon notes. Finally, the employer-based model means that insurers market their plans to businesses—not individuals—often leading to less innovation and more consolidation.
Moughon’s solution? Give families direct control over the money spent on their health insurance. Instead of employers choosing and paying for plans, he suggests that the $25,500 currently spent per family should go straight to households. Families could then buy catastrophic-only coverage and fund Health Savings Accounts (HSAs), paying cash for routine care and, in theory, driving prices down through consumer choice and competition.
Critics of this approach argue that HSAs haven’t managed to tame costs so far, largely because average employer contributions are too low to give patients meaningful “skin in the game.” Moughon counters that more direct control and higher contributions would empower consumers to discipline the market—or, as he puts it, “The best regulators are empowered consumers.”
Whether in Australia or the United States, the insurance industry is at a crossroads. In both countries, debates over market concentration, consumer choice, and the true role of insurance are more urgent than ever. As regulators, investors, and ordinary families watch these stories unfold, the stakes—both financial and personal—couldn’t be higher.
How these pivotal questions are answered in the months ahead will help determine not just the cost of coverage, but the future of competition and innovation in the insurance world.
