Former IAG Chairman Nicholas Whitlam has begun legal action against the insurer seeking payment beyond his retirement benefit.

In the NSW Supreme Court last week Mr Whitlam made claims of unconscionable conduct by IAG in delaying his retirement payout for two years and underpaying him. IAG paid him a retirement benefit of $637,858.

Mr Whitlam received the $637,858, including $207,000 in accumulated superannuation, in September 2003. This timing was delayed until the resolution of another court case.

He is claiming a total package of about $950,000, plus compensation for stress and anxiety due to the delay.

Mr Whitlam resigned from the chairmanship and board of IAG, then known as NRMA Insurance Group in April 2001.

IAG director John Astbury said he had promised Mr Whitlam support for a prompt retirement payment of the maximum possible amount allowed under the Corporations Law if the resignation was prompt to reduce boardroom dissension. He denied he was speaking for anyone other than himself with that undertaking.

Mr Whitlam, the son of former PM Gough Whitlam and now a NSW south-coast hotelier, said “it was unfair for me not to be compensated properly and the retirement benefit alone was inadequate”.