AIG says it is working to restore full compliance with the industry code of practice after receiving a $30,000 penalty for breaches related to complaints.

The General Insurance Code Governance Committee said the company failed to tell customers that complaints had been delayed, or that they could take matters to the ombudsman.

“Customers need to know where they stand,” committee chair Veronique Ingram said. “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.”

AIG says it is committed to delivering timely and fair outcomes for all consumers.

“We have implemented a remediation plan to comprehensively address the issue with increased resourcing, systems enhancements and operational improvements,” it said.

“This plan is successfully improving our service levels, and we are working to restore full compliance with the code as soon as possible.” 

The insurer self-reported the breach in 2022 and made changes to fix it, but processes failed again. Last September it reported the issues as another significant breach but was unable to confirm when the problems first resurfaced.

The sanction notice says staff turnover, inadequate resourcing and operational breakdowns, especially during onboarding and expansion of its complaints function, exacerbated problems.

AIG has resumed writing to customers about complaint progress and has advised more than 700 of their right to take issues to the Australian Financial Complaints Authority.

The insurer has recruited and trained staff, improved oversight, acted to lift data quality and record-keeping, improved co-ordination between claims and complaints personnel, and increased complaints team resourcing. 

The $30,000 penalty will be paid to a charity with a consumer protection focus. The committee also ordered AIG to fund an independent code compliance audit and to publish breach details on its website. 

Financial Counselling Australia, the Consumer Action Law Centre and the Financial Rights Legal Centre say the latest case adds to a “troubling pattern” of non-compliance by insurers, and have called for tougher sanctions in the next code update.

“The new code needs to substantially uplift both consumer protections and penalties for non-compliance to have any meaningful impact on the status quo,” Consumer Action CEO Stephanie Tonkin said.