A class action has been launched against IAG and its subsidiary Swann Insurance, alleging “misleading and deceptive conduct” in relation to add-on insurance.
The litigation is conducted by Johnson Winter & Slattery in cooperation with Bannister Law, and IAG today issued a statement to the Australian Securities Exchange confirming that it is “aware of a representative proceeding”.
“The claim, seeking compensation, relates to misleading and deceptive conduct in relation to the way the insurance products were presented and sold in car dealerships to purchasers of motor vehicles and motor cycles between 1 January 2008 to 1 August 2017,” Principal at Bannister Law Charles Bannister said.
In June last year insuranceNEWS.com.au reported that Bannister was investigating potential class actions against seven insurers that sold add-on cover.
IAG was grilled over the often worthless products during the Hayne royal commission hearings.
The company decided more than two years ago the products were not delivering the value expected by customers and sold its Swann Insurance motor vehicle distribution rights in August 2016. It ended sales through motorcycle dealers in October 2017.
An IAG spokesman told insuranceNEWS.com.au that while Swann no longer sells any add-on products, customers with long-term policies are still supported.
IAG says since January last year it has been contacting impacted customers to tell them about refund options available. It has so far refunded more than $22 million to more than 38,000 customers.
“We are currently in the process of reviewing the statement of claim in relation to a representative proceeding filed on behalf of a Swann policyholder,” the spokesman said.
“As we’ve previously acknowledged, for many customers, the Swann add-on insurance products did not deliver the value they should have.
“We have previously agreed, in consultation with ASIC, to offer $39 million in refunds to the 68,000 affected customers that we identified.
“Swann no longer sells add-on insurance products but continues to support customers with existing policies. Swann now only offers comprehensive motorcycle insurance directly to customers via its website.”
At last year’s AGM, Chairman Elizabeth Bryan accepted that IAG had failed customers.
“It is already clear that many of the issues highlighted [at the royal commission] so far are the result of a failure to consider the best outcomes for customers,” she said.
“In our own backyard this certainly was the case with the add-on insurance sold by Swann through car yards.
“In hindsight we could have acted earlier.”