Australia's IAG to pay $138m in class action settlement

Insurance Australia Group (IAG) has agreed to a settlement of the class action brought against its subsidiaries Swann Insurance and Insurance Australia by Johnson Winter & Slattery.

The settlement involves a gross payment of $138 million and is subject to approval by the Federal Court of Australia. It relates to add-on insurance products sold through motor vehicle and motorcycle dealers.

IAG exited these business areas with the sale of Swann’s rights to distribute through motor vehicle dealers in August 2016 and the cessation of distribution through motorcycle dealers in the financial year ended June 30, 2018.

The insurer stated that inclusive of all related costs and after insurance recoveries, it anticipates a net after tax impact from this settlement of less than $50 million, to be reflected in its reported earnings for the six months ended December 31, 2020.