News: IAG UPDATE 1-Aussie corporate regulator alleges insurer IAG misled home insurance customers

(Adds details of allegations throughout)

Aug 25 (Reuters) - Australia's corporate regulator said on Friday said it filed a lawsuit against two of Insurance Australia Group's (IAG) (IAG) units, alleging they misled customers about loyalty discounts available for certain types of home insurance.

The Australian Securities & Investments Commission (ASIC) has commenced civil proceedings against Insurance Australia Ltd (IAL) and Insurance Manufacturers of Australia (IMA) in the Federal Court, alleging loyal customers may have had their premiums increased before the promised discounts were applied.

"There is a risk that loyal customers, having been promised a discount, were persuaded to stay with these companies, and in doing so lost their opportunity to shop around for a better price" ASIC Deputy Chair Sarah Court said.

The regulator is seeking declarations of contravention, pecuniary penalties and adverse publicity orders against IAL and IMA from the court.

In June, the regulator, in a separate matter, fined IAL a record A$40 million ($25.66 million) for failing to deliver on some discount related promises made to customers.

IAG did not immediately respond to a request for comment.

($1 = 1.5586 Australian dollars)