A class action has been launched against IAG and its subsidiary Swann Insurance over add-on cover sold through motor dealerships.

IAG was grilled over the often-worthless products during the Hayne royal commission hearings, and now Federal Court of Australia proceedings have been filed by Johnson Winter & Slattery in co-operation with Bannister Law.

“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 motorcycles between January 1 2008 and August 1 2017,” Bannister Law Principal Charles Bannister said.

IAG issued a statement to the Australian Securities Exchange confirming it is “aware of a representative proceeding”.

An IAG spokesman told insuranceNEWS.com.au that while Swann no longer sells add-on products, customers with long-term policies are still supported.

IAG says since January last year it has been contacting affected customers to tell them about refund options. It has so far refunded more than $22 million to more than 38,000 customers.

“We are… 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.”