The Guardian September 8, 1999


Critical NRMA elections

Members of the NSW motorists' association, the NRMA, are currently 
voting for eight of the 16-member Board of Directors. The key question 
facing the 1.8 million members is whether the NRMA's insurance operations 
should be privatised.

The NRMA is best known for the excellent road service it offers members, 
coming to the rescue when cars break down, batteries are flat, keys are 
locked in the boot, etc.

The cost of this important service is shared by all members through the 
payment of a uniform membership fee regardless of type of car, its age or 
condition.

In addition, the NRMA offers members a range of other services including 
vehicle inspections, motoring advice, travel bookings, road safety research 
as well as a lobby for motorists.

As a mutual, not-for-profit organisation, NRMA Insurance has ploughed back 
any surplus into the organisation.

As a result members have benefited from rebates on their insurance 
premiums, making it highly competitive compared with other insurance 
companies.

Because NRMA Insurance's prime aim has been to serve members, not return 
fat dividends to shareholders, it has built up considerable loyalty amongst 
its policy holders.

Compared with its private sector rivals the NRMA gained a reputation as 
fair in handling claims and in its treatment of staff.

Things began to change in the early '90s when there was a push to 
demutualise the NRMA by floating it on the stockmarket. An attempt to float 
was made by a majority of the Board in 1994.

Board members Richard Talbot and Dawn Fraser successfully blocked the 
attempt in the Federal Court which found the Prospectus (for floating 
NRMA's insurance group) was a deceptive and misleading document. Around $30 
million of members' funds were wasted by the Board in the privatisation 
attempt.

Although the privateers were defeated then, they did not abandon their aim, 
and management continued with internal changes in preparation for 
privatisation.

Staff, in particular, have experienced a change for the worse in their 
"workplace culture".

Privatisation will affect everyone, not just NRMA members.

NRMA insurance will rise to "what the market can bear", and other insurance 
companies will charge more as they will no longer be constrained by a 
cheaper competitor.

It will become much tougher when making claims and NRMA's staff will find 
their workplace is no different to any other private insurance company 
where profits dominate everything and workers and customers come last.

The road service could suffer and cost more, fees could be introduced for 
roadside attendance and the number of NRMA outlets be reduced as the 
special relations between motorist services and insurance disappears. (They 
currently have joint facilities and promotional material.)

"One person (member)  one vote" will be replaced by "one share  one 
vote". Those accumulating the largest numbers of shares will take control 
of the board away from NRMA members.

Forget any "guarantees" limiting ownership by financial institutions or 
foreign investors; these will sooner than later go out the window. Then it 
will be merger and takeover time by the big (most likely foreign) financial 
institutions.

At present the majority on the Board in favour of demutualisation is nine 
to seven.

Five of the nine pro-privatisation members are up for re-election, as are 
three of the seven anti-privatisation members.

Vote mutual

There are two groups supporting the retention of the NRMA as a mutual  
the Motorist Action Group (MAG) headed by Richard Talbot and the Members' 
Mutual with Jane Singleton.

The MAG, formed in 1988, strongly opposes demutualisation. Its members on 
the Board have a proven record of supporting the NRMA as a mutual 
organisation.

"The NRMA should be run as a mutual. Half of each year's profits should be 
returned to members via cheaper insurance premiums", said Board member 
Richard Talbot. (Mr Talbot is not up for re-election this year.)

The last three years' profits come to $1 billion.

The Members' Mutual was formed more recently following the first attempt to 
demutualise the NRMA.

There is a range of candidates standing for each of these teams, and it is 
likely that some from each team will be elected.

It is a first-past-the-post election, no allocation of preferences.

Nick Whitlam's "Members First" group and "Members' Voice" (claiming to be 
independents) candidates are pro-privatisation despite the false impression 
given by their titles.

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