The Insurance Australia Group Ltd (ASX: IAG) share price is sliding today, down 1% in early afternoon trade to $5.34 per share.
Below we take a look at the insurance giant's latest market announcement.
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What did IAG announce?
The IAG share price is slipping lower today after the company reported CMC Hospitality has filed an application starting a representative proceeding against it in the Federal Court of Australia.
The S&P/ASX 200 Index (ASX: XJO) listed insurance giant could not yet provide details of the application as it had not been served with it. However, IAG noted the application "appears to relate to insureds who hold policies with CGU and business interruption losses related to COVID-19".
CGU Insurance Limited is an intermediary-based insurance company that is part of IAG.
With a new wave of lockdowns impacting business operations across Australia's most populous states, business interruption losses are growing into the multiple billions of dollars.
IAG stated it is among a number of other insurers who will be part of "an industry test case" in Federal Court hearings that are commencing today. It said the test case is "the most efficient process to obtain clarity and to resolve issues for customers with business interruption claims".
The insurance company said it will follow the court's final rulings and assess any business interruption claims "as quickly as possible" once the case is resolved.
As it stands, IAG said it "remains satisfied with the adequacy of its provision for business interruption claims".
IAG share price snapshot
The IAG share price is up just over 13% in 2021, compared to a year-to-date gain of just under 12% for the ASX 200.
Over the past month IAG's share price has gained 7%. The past month's returns are largely credited to a strong results reported in early August for the 2021 financial year. That included a 170% increase in cash earnings from FY20 and a doubling of its dividend payout.
