Insurer sanctioned for repeated failures to tell customers about their rights

The General Insurance Code Governance Committee (CGC) has sanctioned AIG Australia Limited (AIGAL) for breaching its obligations to tell customers that their complaints had been delayed or that they had the right to take their complaint to AFCA.

Over several years, AIGAL denied hundreds of customers essential information, leaving many in limbo waiting for updates that never came. AIGAL’s failures amount to serious breaches of the Code of Practice.

Chair of the CGC, Veronique Ingram, emphasised the importance of clear communication from insurers.

“Customers need to know where they stand. When a complaint drags on, they deserve a clear update, and they must be told they can take it further if they’re not happy with the outcome,” Ms Ingram said.

“These failings have a real effect on people’s lives. When you’re already dealing with disputes or claims, being left in the dark only makes the situation worse.”

AIGAL first identified issues with its timely handling of complaints in 2022, resulting from a failure in its processes. It implemented fixes to correct these issues and confirmed this through an independent review.

However, customers were failed again when key parts of this process ceased entirely. Concerningly, the reocurrence was not identified and reported until late 2024.

Due to a period of high staff turnover, AIGAL was unable to confirm when the issue first reoccurred between 2022 and 2024.

The CGC found that AIGAL had not embedded process improvements and failed to maintain sufficient oversight to prevent the issue from reoccurring.

“This showed a breakdown in governance and in the systems needed to manage complaints well and meet the Code’s standards. It was not a one-off mistake,” Ms Ingram said.

While AIGAL has since taken steps to contact affected customers and restore its processes, the problems could have been prevented with better oversight. Further, these actions come too late, with the issue going unidentified and unaddressed for up to two years.

To hold AIGAL accountable and support better outcomes for consumers, the CGC has imposed three sanctions.

• AIGAL must undertake an independent audit of its compliance with complaints handling obligations under the Code.
• AIGAL must make a $30,000 community benefit payment. These funds will be directed to a charity that supports consumers affected by similar issues.
• AIGAL must publish details of the breach on its website to raise awareness and demonstrate its commitment to Improving and compliance with the Code.
  Ms Ingram welcomed the sanctions as meaningful responses to the failings of the insurer.

“These sanctions are important. They are about holding AIGAL accountable for its failings and lifting standards across the industry,” Ms Ingram said.

“When complaints aren’t handled properly, it affects trust in the insurer and in the industry as a whole.”

The CGC expects all insurers to prioritise clear communication, early action, and strong oversight to ensure fair outcomes for consumers and better compliance with the Code. It expects insurers to review their own compliance in handling complaints and ensure similar issues do not occur.

Read the notice of sanction.

The General Insurance Code Governance Committee is an independent body that monitors and enforces insurers’ compliance with the Code of Practice.

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