Why the Suncorp (ASX:SUN) share price is on watch

The Suncorp Group Ltd (ASX: SUN) share price is on watch after the Aussie insurer was hit with a class action by Maurice Blackburn.

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The Suncorp Group Ltd (ASX: SUN) share price is one to watch today after a litigation update from the Aussie insurer.

Why is the Suncorp share price in focus?

A Suncorp subsidiary is facing Victorian Supreme Court proceedings related to the sale of add-on insurance products. That subsidiary, AAI Limited, has received a representative proceeding for the sale of add-on insurance through MTA Insurance.

The proceedings were lodged by Maurice Blackburn and are targeting add-on car insurance sold by MTA.

Suncorp said that it is currently reviewing the matter and it intends to defend the class action. The Suncorp share price will be one to watch following the latest update. 

Suncorp is far from the first Aussie insurer to be targeted by Maurice Blackburn over these products. On 11 November 2020, Maurice Blackburn commenced a class action against the Australian arm of Allianz Insurance.

The Allianz Car Dealer Add-On Insurance Class Action relates to the add-on of insurance products. Those include loan protection insurance, motor equity insurance, extended motor warranty and tyre and rim insurance.

It follows similar class actions that have settled against Swann Insurance, Winter & Slattery, and Davantage Group Pty Ltd (National Warranty Company), conducted by law firm Baker McKenzie.

The Suncorp share price climbed 2.1% yesterday to close at $10.46 per share.

Shares in the Aussie insurer have also jumped 13.0% in the last 12 months and 28.8% since the start of November 2020.

Foolish takeaway

The Suncorp share price is worth watching after the latest class action suit by Maurice Blackburn.

Suncorp intends to defend against the suit, with the insurer already having refunded $17.2 million in add-on insurance premiums back in January 2018. That saw the insurer refund 41,428 add-on insurance customers of MTA between 2009 and 2017.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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