The $500 million-plus package funded by the Government from the Federal Budget will help some 28,000 claimants and take several years to complete.

Financial Services and Regulation Minister Joe Hockey announced the criteria for the relief, with a promise to put in place a public awareness campaign and advertise a hotline for HIH policyholders. He said he is confident most claimants will be paid.

The assistance will come from the Budget via HCS – HIH Claims Support Pty Ltd – see article in Local News. HCS will provide claims management and payment services on a cost-only basis from QBE, NRMA, Allianz and Royal & SunAlliance.

Only Australian citizens or permanent residents will be available for the assistance. The Government will pay the full claims of:

• people with salary continuance policies;

• personal injury claims;

• claims for a total loss on a primary place of residence; and

• claims where the insured is an Australian not-for-profit organisation.

• The Government will pay 90% of claims:

• where the insured is an Australian small business with 50 employees or less; and

• where the insured is subject to an income test. This test will pay claims where family taxable income is less than $77,234, increased by $3139 for each additional child. Where family taxable income is more than $77,234, the policyholder will qualify for assistance if the claim is more than 10% of family taxable income.

Claims must be made before June 11, or a claim related to an event that occurred before June 11.

Anyone who has not taken out a new policy and is currently insured with HIH should seek a new policy as quickly a possible, Mr Hockey said. “Events that occur after midnight on June 10 will not be covered by this package.”

For local government claims, the Federal Government will offer to contribute on a one-for-one cost-sharing basis with the states. However, the states will remain responsible for the financial position of their own compulsory insurance schemes. The Federal Government will also offer the use of HCS to the states when they pay financial assistance.

An appeals mechanism will be set up to consider cases that involve anomalies in the application of the income test and policyholder categories.

The provisions specifically exclude claims where the insured was a director or officer or an associate of any company within HIH three years before its failure. Claims where the insured was an individual or an associate of an individual “who was in a position to influence or advise the directors or officers of any companies within HIH three years before its failure” will also be excluded.