The Insurance Australia Group Ltd (ASX: IAG) share price is trading in the red on Monday, down 1.6% at $7.555 apiece at the time of writing.
The company posted an update today regarding a policyholder class action that the Federal Court handed down on 20 September.
With shares in the insurance giant now down 1.7% over the past week, let's take a look.
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IAG share price and class action?
IAG updated the market regarding the business interruption policyholder class action, which has been in the spotlight since the COVID-19 pandemic.
Last week, the Federal Court of Australia stated its intention to declass the proceeding filed against IAG's subsidiary, Insurance Australia Limited, regarding policyholders with claims related to business interruption policies during the pandemic.
To declass a class action lawsuit means the court rejects or discontinues the proceedings where it finds the case does not meet certain criteria.
The court's proposal will determine the next steps after a case management hearing. Members will be informed of their rights to pursue any claims they might have.
IAG notes the judgment of the Federal Court of Australia (the "Court") delivered on 20 September
2024 in which the Court stated an intention to declass the representative proceeding filed against
Insurance Australia Limited ("IAL") relating to policyholders with business interruption policies……IAG welcomes the judgment and continues to encourage its customers with business interruption
cover who may have been impacted by COVID-19 to lodge a claim which will be assessed as
efficiently as possible under our standard claims process.
What impact this may have on the IAG share price is yet to be seen.
Critically, this also doesn't relate to the undergoing parliamentary inquiry into major flood claims of 2022.
Financials undeterred
Despite these legal hurdles, IAG's FY24 financial results paint a different picture. The insurer posted a 79% surge in insurance profit to $1.4 billion, with net profit rising 8%.
Its insurance margin also climbed to 15.6%, the highest since pre-pandemic levels. Premium increases in property and motor insurance drove this result.
So, while the class action was underway, the insurance giant has been steadily doing more business. This is likely why the IAG share price has climbed 34% this year to date as well.
However, recent political comments from the US about cracking down on car insurance costs have caused a stir for insurance stocks on the ASX.
The thinking is that talks of potentially slashing insurance premiums could inspire similar political moves in Australia – especially with cost-of-living concerns front and centre ahead of the next federal election.
Time will tell what happens with regard to insurance policy.
Foolish takeaway
The IAG share price has been strong in 2024. With the court declassing proceedings related to its business interruption case, for now, the IAG share price seems largely undeterred by any news surrounding the class action.
The stock is up 31% in the past year.
