Members of the armed services community would be “bitterly disappointed” if the Federal Government scraps the Defence Service Homes Insurance Scheme, according to RSL Victorian State President David McLachlan.

“They have got a relationship with Defence Service Homes and it has always been a very good scheme,” he told insuranceNEWS.com.au.

“Many servicemen and women move frequently and it has always been able to provide for their needs.”

The recent National Commission of Audit report suggests abolishing the scheme under a range of proposals to reduce the role of government, saying there is “an established and competitive insurance market”.

“There is no compelling rationale for continued government involvement in this area.”

The scheme dates from 1919. Products including home and contents insurance and private motor cover are provided by QBE.

People eligible for insurance under the scheme include current or former defence force members, reservists and peacekeepers, and their widows and widowers.

The insurance division has operated in conjunction with war service home programs that provide low-interest mortgages to people who have served in the military.

“While this is a recommendation that will be considered by the Government, no decisions have yet been made about the future of the scheme,” a Department of Veterans’ Affairs spokesman said.