The Federal Court is this week hearing evidence in the Australian Securities and Investments Commission case against IAG over home insurance loyalty discounts.

ASIC has alleged Insurance Australia Ltd and the Insurance Manufacturers of Australia joint venture misled customers about discounts they would receive, because of the way pricing algorithms were used. IAG is contesting the allegations.

Justice Stewart Anderson began hearing the matter in Melbourne last week. Hearings are scheduled to continue today and tomorrow, then on Thursday and Friday next week.

The action relates to the SGIO, SGIC and RACV brands.

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