Class action weighs on IAG shares
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More news: IAG shares were down 2% to $6.27 in early trading on the ASX after the insurance giant confirmed a class action lawsuit filed by law firm Slater and Gordon in Victoria’s Supreme Court on behalf of millions of RACV, SGIO and SGIC customers.
The class action extends the legal troubles for the insurer over allegations it misled customers over loyalty discounts offered on home insurance. It is already facing an ongoing case in the Federal Court, initiated by the corporate regulator over similar allegations.
IAG faces class action over misleading home insurance customers
The news: Insurance giant IAG will face a class action lawsuit over allegations its subsidiaries misled customers over loyalty discounts offered on home insurance, extending its legal troubles over the ongoing court case.
The numbers: Law firm Slater and Gordon said late on Tuesday it had filed a class action on behalf of millions of RACV, SGIO and SGIC customers in Victoria’s Supreme Court.
The lawsuit alleges the insurers misled customers between 2018 and 2024 by incorrectly calculating and promoting loyalty discounts to entice policyholders to renew their home and contents insurance.
The context: The lawsuit adds to the allegations made by the corporate regulator in August 2023, when it sued IAG subsidiaries for misleading customers over loyalty discounts on certain types of home insurance between January 2017 to December 2022. Those proceedings in Federal Court are ongoing.
Slater and Gordon said the insurers engaged in misleading, deceptive and unconscionable conduct.
What they said: “We’re alleging that millions of Australians paid premiums year-on-year to these IAG insurers on the promise that they were getting a discount," Slater and Gordon class actions practice group leader Ben Hardwick said.
"But in reality, because of this pricing algorithm they were using, new customers were typically paying less for their policies than loyal customers who had been with them for more than 20 years."
IAG said in a statement the group maintained it had delivered on loyalty promises made to customers and will defend the class action, reiterating its stance against the regulator's proceedings.
The sources: IAG, Slater and Gordon
