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Insurance Australia Group reaches $99 mln settlement over mis-sold insurance

Oct 6 (Reuters) - Insurance Australia Group on Tuesday said it had agreed to a class action settlement involving a gross payment of A$138 million ($99 million) over add-on insurance products sold through motor vehicle and motorcycle dealers.

IAG, Australia’s second-largest insurer by market cap, said the settlement is expected to have a net after tax impact of less than A$50 million on the company’s earnings for the six months ended Dec. 31, 2020.

The settlement sum, which is subject to approval by the Federal Court of Australia, is much less than the A$600 million to A$1 billion anticipated by the company earlier.

The Sydney-based insurer initially gave details in April lsat year of the class action, which was brought against its units, Swann Insurance (Aust) Pty Ltd (Swann) and Insurance Australia Ltd, by law firm Johnson Winter & Slattery.

IAG said it 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 June 2018.

$1 = 1.3922 Australian dollars Reporting by Nikhil Subba in Bengaluru; editing by Richard Pullin

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