Top finance veterans, including current Commonwealth Bank director Peter Harmer, declared for years insurer IAG had sound risk-management systems while regulatory debacles costing $500 million ticked away internally.
“The fact that the IAG board were not receiving crucial intelligence suggests there were problems with the risk-management framework,” said Elizabeth Sheedy, a risk-management expert at Macquarie Business School. People who worked at IAG linked the long-festering discounting error to cultural shortfalls including complacency, arrogance and a reluctance to deliver bad news.. “Don’t rock the boat.”
IAG’s governance statements also detailed a “three lines of defence” risk system, designed to internally weed out and audit any problems. “There is no evidence [the general manager] responded or took any steps in response to this email,” ASIC’s submission said.Missed opportunities also struck: one worker in pricing asked an IAG compliance specialist about an ASIC warning about discounting in June 2015. The compliance specialist said it was “very much an issue” if minimisations occurred after gross premium calculations.
Ms Bryan also said no senior leadership member “with direct accountability for the operational risk matters” remained at IAG. That statement alienated some former employees who sources say had uncovered the issues in the final years, as they felt it implied they were responsible.