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Friday, May 25, 2012

IAG – bad at playing nicely, or just misunderstood? Part 1

According to various news reports on Wednesday IAG Insurance was "genuinely surprised" to learn some of its customers (via State Insurance, an IAG company) are in the process of taking legal action against them. See the Press article here.

It is true, as the IAG spokesperson said, there are talks going on in the background aimed at resolving some issues. But who are the agencies involved, what is being discussed, and what do they hope to achieve? As always there is no openness, just another one-sided Minister Brownlee sideshow. Is IAG involved? Could they make any meaningful contribution if they genuinely don't know what concerns their clients' have?

In this part of the world it is hard to imagine anything genuine about IAG and it's subsidiaries. Yes, where an assessment is blindingly obvious, they will be sweetness and light - there is no alternative. The moment there is a situation that can in any way be deemed unclear, the behaviour changes. In our area, as in others, they have been active in downgrading assessments from rebuilds to repairs, and high value repairs to lower value repairs.  Trying to get full information from them about assessment details and costings has been made into a difficult and demoralising process. Cooperation and communication seem to be gaps in IAG’s vocabulary and operating manual. Is this a fair reflection on the multi-national Australian company? In my opinion it is.


The behaviour of an IAG Australia company was strongly criticised by the Queensland Floods Commission of Inquiry (Chapter 12, Performance of private insurers, see here).  One of the worst (possibly the worst) performing insurance companies after the floods was CGU (part of IAG – see the IAG website in Australia here). 

CGU were criticised for their failure to cooperate with the Commission (providing incomplete information, withholding information, and being inaccurate). In addressing CGU’s shortcomings in providing information for the Inquiry, the Commission said: “… the insurer was neither careful nor diligent in its responses to Requirements.”(S 12.3.1).

In the case of CGU’s dealings with clients, and one client in particular, the Commission dedicated a number of pages to describe the shortcomings of both the company’s processes and also the staff, with particular reference to the CEO. (p 308-319)

Have  Minister Brownlee, CERA staff, and staff from the Department of Building and Housing read Chapter 12 of the Report of the Queensland Floods Commission of Inquiry? If they have they would know most of the inadequacies displayed by insurance companies in Queensland (e.g. poor communication with policy holders, poor processes including assessment systems, poor treatment of policy holders) are in practice here. Quite a coincidence really. Or is it the culture of the insurance industry in Australasia or further afield?


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