HCS Pays $100 Million in First Year

Assistant Treasurer Senator Helen Coonan announced today that the Government scheme to assist victims of the HIH collaps had paid out $100 million to or on behalf of policyholders, in just over a year.

Senator Coonan said the HIH Claims Support Scheme had been in operation for 55 weeks, during which time a corporate structure was established; more than 9500 applications for assistance received; and 6200 processed and referred to claims managers for claims management. Over 1,900 of these claims had now received payment.

"It is a terrific achievement that in just over a year the scheme has cracked the $100,000,000 mark, ," Senator Coonan said.

"The Federal Government moved quickly to institute the scheme, but without the support of Australia's insurance industry, in particular the participating claims managers QBE, Allianz, Royal & Sun Alliance and the Insurance Australia Group I doubt the scheme would have reached such an impressive milestone so quickly.

"When you consider that there are around 20 insurance types being processed by HCS, including motor vehicle, household building and contents, personal accident, professional indemnity, salary continuance, liability and so on, it's a major task sourcing qualified and experienced staff."

The HCS Scheme was announced in May last year and originally budgeted for $640million. These figures were established following initial estimates from HIH Liquidator.

"The Commonwealth has undertaken an actuarial review, which has adjusted the estimate to $600million. the actuarial review also meant that the distribution of claims payments has also been adjusted with more claims likely to be paid in later years," Senator Coonan said.

"We have a more accurate view of the types of business being processed by the Scheme than we did last year, and we're looking at more claims, primarily from small business, for liability and professional indemnity than personal lines. These claims usually take longer to finalise as they often involve litigation"

"Liability and professional indemnity can take years to resolve in the courts, and the Commonwealth has made a commitment to those individuals on salary continuance to ensure they are not left high and dry as a result of HIH's failure."

Senator Coonan said the HCS Scheme was still receiving a steady 20 applications a day. No date had been set to stop receiving applications, but even after the scheme stops receiving applications work would continue managing claims.

HCS Statistics as at August 2002

Total applications received 9562

Total number referred to claims managers 6218

Total number rejected (outside criteria) 732 (ie exceed income threshold, employ more than 50 employees, policy not covered by scheme, or not the policyholder)

Total amount paid out $100,536,243

Insurance types

*Other includes, bloodstock, livestock, aviation, property and commercial, sports injury, trade credit.

Applicant type