Insurance Australia Group (IAG) has announced it will defend a class action proceeding on behalf of shareholders.
Law firm, Quinn Emanuel, filed the class action in the Supreme Court of Victoria last month for “breaches of its continuous disclosure obligations, and for misleading and deceptive conduct”.
The firm accused IAG of failing to “update its policies that relied upon legislation… to underpin its intention to exclude business interruption cover in its policies in relation to ‘quarantinable diseases'” between 11 March 2020 and 20 November 2020.
It’s alleged that despite not amending the policies, IAG informed the market that because it intended to exclude pandemic cover, the court would find in its favour and that whatever the outcome, its “conservative provision” for COVID-19 related business interruption claims were adequate.
The NSW Court of Appeal unanimously decided that the pandemic exclusion clauses were ineffective, while the High Court of Australia also refused an application for leave to appeal by IAG.
Following this, the company announced post-tax provision of $865 million “to cover potential business interruption claims related to COVID-19” and a $750 million snap capital raising to address the $865 million provision.
On Tuesday (2 August), IAG acknowledged that the proceeding had been filed, saying in a statement: “IAG intends to defend the proceeding”.
Quinn Emanuel partner Damian Scattini, responded to IAG’s comments in a statement given to ifa.
“Class actions are invariably defended, so there is nothing unusual about IAG’s statement that it will defend this claim,” Mr Scattini said.
“Our client is confident in the merits of the case that he has put forward on behalf of fellow investors in IAG securities.”
