IAG is vigorously defending a $24 million claim for loss and damages brought against UK motor subsidiary Hastings by a former panel insurer for alleged breaches of its duties under an agency agreement.

Responding to reports in UK insurance publication Post Magazine alleging IAG is preparing a multi-million pound warranty counter-claim against Hastings’ previous owners, a company spokesman told Sunrise Exchange News today the case is currently in arbitration.

“The claim relating to an insurer for whom Hastings acted as underwriting agent is currently being vigorously defended in arbitration proceedings, which are confidential, so we are unable to make any disclosure about the substance of the claim or the proceedings, without breaching that confidentiality,” she said.

IAG acknowledged the dispute with a former panel insurer in its annual report, along with a separate potential tax liability for Hastings which, if proven, “would give rise to a claim under a tax indemnity provided by the previous owner”.

IAG purchased Hastings and motor underwriter Advantage late last year for $350 million. IAG CEO Michael Hawker cited “operational issues at Advantage and Hastings” that weren’t uncovered by due diligence at the time of the acquisition when issuing an earnings downgrade in late October.

A company spokesman says IAG was aware of the tax liability at the time of Hastings’ purchase and has allowed for the potential bill.

“There is a potential tax bill, but the resulting liability is wholly recoverable from the previous owner of the business. We were aware of the potential liability when the company was acquired and ensured that our purchase agreements provided for full indemnities.

“The amount of the assessment would not be significant to IAG.”