AIG has won a dispute with a landlord that failed to disclose its building was no longer occupied by a restaurant and that a religious organisation met weekly on the upper floor.

The insurer declined a 2023 theft claim for $99,295, saying the landlord had failed to comply with its duty of disclosure at renewal in June that year.  

A month before that, AIG’s underwriting guidelines were changed to amend several occupants from “in” to “outside appetite”. They included religious institutions, because of fire risks stemming from arson attacks. 

At the policy’s inception in 2019, the landlord’s broker had applied through AIG’s online portal and the tenant business was listed as “restaurant, licensed, with wok frying”.  

The 2023 renewal had the tenant business as “restaurant – with wok cooking”. No other use was listed. 

AIG said the claimant at no point declared the premises were largely unoccupied and the first floor was used occasionally by the religious group. 

In a dispute ruling, the Australian Financial Complaints Authority accepts AIG would not have renewed the policy had the disclosure been made. 

“The insurer is entitled to reduce its liability for the claim to nil and decline the claim.” 

Had AIG been told of the changes at the 2023 renewal, the risk would have been referred to an underwriter, then to a more senior figure, and cover would have been declined. 

“Religious organisations were no longer ‘in appetite’ for the insurer ... Therefore, it would not have been on risk when the claim event occurred.” 

See the ruling here.