Law firm Quinn Emanuel Urquhart & Sullivan has filed a shareholder class action against IAG over its disclosure of potential impacts from pandemic-related business interruption claims.

“IAG intends to defend the proceeding,” the insurer said in an Australian Securities Exchange statement last week confirming the representative action.

The action, filed in the Supreme Court of Victoria, targets IAG over its exposure to contract exclusions citing the Quarantine Act and its announcements to the market during 2020. The action covers people who bought shares between March 11 and November 20 that year.

The statement of claim notes the Court of Appeal delivered a judgment against insurers on the validity of the Quarantine Act exclusions on November 18 2020. IAG on November 20 said that given the decision it intended to recognise an $865 million post-tax provision, after previously expressing confidence about the wordings.

The class action is being run by Quinn Emanuel on a “no-win, no fee” basis, with costs to be deducted from compensation if the action is successful, depending on court orders. There is no third-party litigation funder currently involved.

The Federal Government changed disclosure rules in 2020, raising the threshold so that that companies and officers are only liable for a breach if there has been “knowledge, recklessness or negligence” around price sensitive updates.