2-part post
(Answers numbered in line with your questions):
1. (First part): UK insurers require that all questions should be answered honestly at the time of taking out the policy and that any later changes in the information should be immediately notified to them. A question such as 'Have you been convicted of any motoring offence within the past 5 years?' requires that all such convictions (irrespective of the country where they occurred) must be declared. So your friend should have notified her UK insurers of anything which she was required to mention. (However, if her convictions in Australia were more than 5 years earlier, she could lawfully have answered 'No' to the question I've used in my illustration).
1. (Second part): If your friend lied (or omitted to mention convictions when she was required to do so), she was committing 'fraud by false representation' which is a serious criminal offence, which can lead to imprisonment If she'd had an accident (and the insurer became aware of the fraudulent submissions) the insurer would refuse to pay out on the 'comprehensive' element of any claim but still pay the other party for the 'third party' element of a claim. However the insurer would then sue your friend to get that money back. (If an accident left another driver needing life-long medical support, the insurer might have to pay out several million pounds, which they would then demand from your friend).
2. Renewing a UK licence does not require the licence holder to disclose foreign convictions (but it does require the disclosure of any relevant medical condition, such as chronic alcoholism).