AAMI and GIO face hefty fines

AAMI and GIO face hefty fines | Insurance Business Australia

AAMI and GIO face hefty fines

The State Insurance Regulatory Authority (SIRA) has slapped AAI, trading as the compulsory third party (CTP) insurers AAMI and GIO, with a hefty fine.

AAMI and GIO are facing $50,000 fines each for failing to meet their obligations under the Motor Accident Injuries Act 2017, the first time a civil penalty has been imposed on CTP insurers under the Act.

The fines arose from breaches of both insurers’ internal review timeframes between April 1, 2018, and August 31, 2020, according to SIRA.

SIRA’s investigation of AAMI and GIO

SIRA started an investigation in response to complaints about delays experienced by customers seeking internal reviews.

SIRA issued three letters of censure to AAMI and GIO, but AAI reported further breaches of internal review timeframes for July to August 2020 during SIRA’s September 2020 monthly performance monitoring of internal reviews across the CTP scheme.

The regulator then started further investigations into ongoing issues between April 2018 and August 2020 and identified breaches and contraventions of the act, the Motor Accident Guidelines, and their license conditions. As a result, the regulator issued show cause notices to AAMI and GIO in May 2022 and decided that the appropriate regulatory response is to impose a civil penalty of $50,000 each.

Before deciding the appropriate regulatory response, SIRA said it considered customers’ experience, AAI’s acknowledgement of the insurers’ conduct, significant efforts to address the backlog of internal reviews and communicate options to customers, and the development and implementation of a remediation plan.

The recent regulatory enforcement outcome will be included in both insurers’ compliance history. It follows a court’s decision to sentence a self-employed tradesperson to a 12-month intensive correction order for defrauding the NSW workers’ compensation scheme, investigated by SIRA.