New attempt to privatise NRMA

Last week a board meeting of the NRMA, the NSW motorists' association, 
decided to pursue for a second time the privatisation of the NRMA's 
insurance company. The vote was tied eight-eight, with banker Nicholas 
Whitlam exercising a casting (second) vote in favour of 
demutualisation.

The proposal to restructure the mutual road service association and to 
float its insurance company on the stock exchange needs membership approval 
before it can go ahead.

The demutualisation resolution was opposed by board members Maree 
Callaghan, John Campbell, Bronwyn Gould, Arthur Llewellyn, Genevieve 
Rankin, Jane Singleton, Richard Talbot and Ian Yates.

The question is likely to be put to a membership vote before October when 
elections for the board are due and some of the pro-privatisation members 
could lose their seats.

As the vote indicates, the pro-privatisation board members do not have a 
majority.

An earlier attempt to demutualise the NRMA in 1994 was defeated through 
legal challenges by Richard Talbot and Dawn Fraser (Dawn has since retired 
from the board).

Since then the anti-privatisation forces have gained more places on the 
board and in the next elections could win a majority. Hence the haste by 
those supporting privatisation.

Over recent years management has made a number of changes to the insurance 
company in readiness for privatisation.

NRMA members no longer receive rebates on their insurance policies. NRMA 
treated its employees well compared with other insurance companies but this 
appears to have changed. Staff morale is low with reports of older 
employees leaving after 20 or more years with the company.

Management appears to be trying to change the culture that came with the 
mutual nature of the organisation.

Ian Rogers writing in the Financial Review described the new ethos 
very clearly:

"The name of the game is to keep pace with the better-placed banks for a 
crack at market dominance and the rich stream of profits which well-
positioned firms can extract from a market where demand is rising."

NRMA recently paid $6.6 million for 20 per cent of a Thai insurance 
company. It bought MLC Building Society and SGIO in Western Australia.

Profit has already taken over as driving motive of management — they did 
not wait for demutualisation (privatisation).

"The only thing that will result from the NRMA being placed on the stock 
exchange is that it will be taken over and swallowed up by some other 
organisation", said Richard Talbot.

"The Motorist Action Group directors will always vote to retain the mutual 
and that, in my opinion, nothing has changed since 1994."