Business interruption policies are typically held by public-facing businesses, including restaurants, bars and gyms – those that were disproportionately forced to close to stop the spread of the virus. After an unsuccessful High Court challenge, insurers are now awaiting the results of an appeal that will determine the scope of liability.

Mr Scattini said IAG had failed to keep the market fully informed of the potential exposure ahead of the NSW Supreme Court’s initial ruling, which he said caused IAG’s share price to fall by 7 per cent over the month. “During a teleconference with analysts, they were asked what happens if you lose the case? They [IAG directors] just obfuscated.”

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Quinn Emanuel will allege IAG has a systemic problem with calculating and minimising risk. During the full-year results, IAG’s chief executive Nick Hawkins denied there were systemic cultural problems at the insurer, but vowed to improve executive accountability after the full-year loss was driven by risk management failures.

During the same day, IAG’s outgoing chair Elizabeth Bryan slammed the company’s approach to risk management as “costly and unacceptable” and apologised to all shareholders. Although this was not enough to quell shareholder angst in October, when investors delivered a first strike against executive pay.

Another class action law firm, Gordon Legal, has launched a separate lawsuit against global insurers QBE and Lloyds on behalf of policyholders who have been denied business interruption payments.

IAG acknowledged the class action that has not yet been filed. “We’re aware that Quinn Emanuel Urquhart & Sullivan has announced today that it intends to file shareholder class action proceedings against IAG,” a spokesman said.

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