The Federal Government has appointed advisory group McGrathNicol to conduct a scoping study that could lead to abolition of the Defence Service Homes Insurance Scheme (DSHIS).

McGrathNicol has started planning and preliminary work for its review of the scheme, and will provide progress reports to the DSHIS Advisory Board.

A Department of Veterans’ Affairs spokesman told insuranceNEWS.com.au the scoping study is expected to be completed late this year.

McGrathNicol’s insurance team has previously worked on projects including disputes over the HIH collapse and risk assessments for Vero’s Christchurch earthquake response.

The May budget allocated $200,000 for an expert study on the future of the DSHIS, after the National Commission of Audit suggested abolishing it.

“The scoping study will inform the Government on options for more efficient DSHIS operations,” budget papers say.

The audit report says there is “no compelling rationale for continued government involvement in this area” because there is an established and competitive insurance market.

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