The insurance code governance committee has imposed a $30,000 penalty on AIG Australia for breaching obligations to tell customers their complaints had been delayed or that they had the right to take matters to the ombudsman.

Over several years, AIG denied hundreds of customers essential information, leaving many in limbo awaiting updates that never came, in failures that amount to serious code of practice breaches, the committee says.

Committee chair Veronique Ingram says it is important insurers communicate clearly, and 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,” she 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.”

AIG first identified issues with timely handling of complaints in 2022, due to a failure in its processes.

Fixes were confirmed through an independent review, but customers were failed again when key parts of this process ceased, and the recurrence was not identified and reported until late last year, the committee says. Due to a period of high staff turnover, the insurer was unable to confirm when the issue first reoccurred between 2022 and 2024.

AIG has since moved to contact affected customers and restore processes, but the problems could have been prevented with better oversight and the actions came too late, with the issue unidentified and unaddressed for up to two years, the committee says.

The insurer has been ordered to undertake an independent audit of its compliance with complaints handling obligations under the code, make a $30,000 community benefit payment, and publish details of the breach on its website.

“These sanctions are important. They are about holding [AIG] 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.”