IAG chief executive Peter Harmer has told staff to expect more operational changes after forming a single Australian division and appointing the insurer's former chief operating officer Mark Milliner as CEO Australia.

On Wednesday the $16 billion insurer announced a new unified Australian division bringing together its former Australian consumer, business, operations and satellite divisions. The restructure was part of a previously announced optimisation plan that is expected to drive more than $250 million a year in cost savings by the end of 2019.