A review of the HIH Claims Support Scheme by the Australian National Audit Office (ANAO) has revealed that the scheme is $172 million short of being able to pay all claims by HIH claimants.

The review estimates that the cost of paying claims will rise to $812 million within 20 years, although the $640 million fund, established three years ago by the Federal Government and administered by a company set up with the Insurance Council of Australia would be depleted by 2007.

The audit also noted “at least $1 million” paid on claims that should have been rejected and that legal advice suggested the scheme could not retrieve two ineligible claims worth $668,993.

The scheme was initiated three months after the collapse of HIH, and without it more than 2 million insurance policyholders would have had to wait more than 10 years before receiving any payment.

A spokesman from the Office of Senator Helen Coonan, Federal Minister for Revenue and Assistant Treasurer, says the report was quite positive.

“I don’t term it as a blowout. These figures aren’t set in stone. If more money needs to be paid out then that will be assessed by an actuary at a later date,” she said.

Before it was disbanded in February, the scheme approved a total of 11,284 claims and paid $339 million in claims. The Government is now seeking a private operator to administer ongoing payments.