Insurance Australia Group Limited (IAG) has confirmed that it has been served with a shareholder representative proceeding over its disclosures regarding COVID business interruption (BI) claims.
The company announced that the class action has been filed in the Supreme Court of Victoria on behalf of persons who acquired shares in IAG during the period 11 March 2020 and 20 November 2020.
IAG added that it intends to defend the proceeding, which relates to IAG’s disclosure of the impact of COVID-19 related BI claims on its business.
Back in March of this year, IAG stated that there would be no adjustments to its $1.222 billion net provision for potential business interruption claims related to the COVID-19 pandemic.
This followed a February decision by Australia’s High Court to upheld the arguments of insurers in a BI legal case by finding that in the majority of cases, insurers are not liable to indemnify policyholders.
While positive for carriers, the judgement did also find that certain businesses could make valid claims on pandemic losses on certain limited policies, provided the cause of losses could be identified.
This led to a number of insurers and reinsurers, including IAG, Swiss Re and Chubb, to look to contest the verdict of the pandemic test case.