The Transport Workers Union Superannuation Fund is taking legal action against its former insurer, Colonial, after losing a legal scuffle with ASIC.

The fund will pay out up to $10 million in members’ insurance liabilities and put in place a number of enforceable undertakings after settling a legal action against ASIC. The regulator alleged last November that the fund was liable for up to $10 million in claims it had refused to pay.

The Australian Financial Review said the TWU fund agreed last week to retrospectively re-assess members’ claims, effectively paying out the insurance liability of up to $10 million.

ASIC alleged last year that the trustee of the fund misled members by not adequately informing them about significant changes to its insurance arrangements between 1995 and 1998.

The action against Colonial, which alleges deceptive and misleading conduct and breach of contract, will begin in the Federal Court in July. Colonial will defend the allegations.