NRMA

NRMA refers to either of two historically related Australian companies:

The National Roads and Motorists' Association (aka NRMA Motoring & Services) is a member-owned mutual organisation offering roadside assistance, travel, vehicle inspection and other services in NSW.
NRMA Insurance is a brand and operating unit of Insurance Australia Group, a national insurance and financial services company.

Contents

1.1 National Roads Association
1.2 The role of the RACA
1.3 Creation of NRMA and continued RACA involvement
1.4 Launch of NRMA Insurance
1.5 Cessation of RACA

2 Recent history

2.1 Growth
2.2 Board conflicts
2.3 Demutualisation
2.4 Separate paths

3 Further information

4 Links

Early history

National Roads Association

The Australian National Roads Association, which would become the NRMA, was launched in 1920. Its original aim was not to provide road service or insurance, but to lobby for the improvement of roads in New South Wales.

At this time the planning and financing of main roads, in particular, had fallen into chaos following the defeat of the Main Roads Bill in 1911. Subsequent attempts to create a board to oversee main roads and distribute funding had also failed. The 1919 Local Government Act left all decisions to local councils, where decisions were made “from the point of view of local utility”. ‘Through’ routes and main roads were assigned a low priority.

The role of the RACA

RACA had been campaigning for better roads since its creation. The Club had initiated a Good Roads Association in 1912, and its work was supported by the newspapers, notably the Sydney Morning Herald.

The National Roads Association was to be a broader and stronger pressure group seeking the same ends, and it received full support from RACA. When the Association was formally established on February 4, 1920, its provisional committee included RACA President WJ McKinney, and RACA’s Roads and Tours committee chairman DM Cooper. There was also AR Bluett, secretary of the Local Government Association, who had held office with Cooper in the Goods Roads Association.

Creation of NRMA and continued RACA involvement

The NRA restructured as the National Roads and Motorists’ Association at the beginning of 1924. The aims of the NRMA were to “cover everything necessary for the advancement and protection of motorists in all circumstances”, a goal strikingly similar to that of RACA. This positioned the NRMA as a competitor as much as collaborator, particularly when it began to employ its own road service “guides”. These returned servicemen “of exemplary character” patrolled specific areas, including the popular beaches of Coogee, Bondi and Bronte, or were based at congested spots on the roads out of the city where they could receive messages by phone or relayed by other motorists.

RACA and the NRMA continued, nevertheless, to work together on issues of shared concern, such as continued lobbying for better roads. They shared the same solicitor, McCartney Abbott. In a joint initiative the Princes Highway was “blazed with a red colour trail”. Strips of colour banded by white were painted on telegraph posts, fences and trees as part of a network of trails along State highways.

The NRMA attended a 1925 meeting convened by RACA on traffic regulations, prior to a government traffic conference. Together with other motoring lobby groups, including the Motor Traders Association and Newcastle Automobile Club, they resolved to draft suggested reforms. Particular concerns included the need for a special traffic court, and a change to the “plethora of danger signs” that had appeared in the streets, accompanied by “frequently incomprehensible signals of police” at intersections. As an alternative to the red triangle placed by police at danger spots, the NRMA favoured (and sponsored) the highway lighthouse, a beacon powered by acetylene that could flash for as long as four months without attention.

Launch of NRMA Insurance

The NRMA’s membership was growing rapidly, nearly doubling to 7637 in the year to June 1925. An added incentive was NRMA Insurance, formed in 1925 and reestablished in 1926 as a private mutual company. By becoming a subagency of Lloyds of London, NRMA Insurance was able to offer household policies in addition to motoring insurance.

Cessation of RACA

As the Depression took hold in 1928, it was apparent to both the NRMA and RACA that the two organisations were pursuing similar goals and duplicating services that might be combined. According to NRMA records, it was RACA that approached the NRMA regarding a merger. The NRMA went as far as examining RACA’s books, but its Council voted against the merger. RACA subsequently rejected affiliation proposals put by the NRMA.

In 1939, the NRMA had 66,234 members and a huge road service operation. When the war in Europe began, it made a £10,000 donation to Australia’s war effort, and followed RACA’s early lead in forming the NRMA Transport Auxiliary. This force of 500 owner-drivers would provide rapid troop transport if required. Staff member Miss K Broadbent organised a Women’s Auxiliary Transport Corps and successfully trained 506 women to handle trucks, lorries, ambulances and motor cycles.

RACA and the NRMA were both involved in information campaigns during the war, including the discouragement of petrol hoarding, considered both unpatriotic and dangerous. After the war, lobbying by the NRMA, RACA and affiliates in other States had a direct effect on the 1949 Coalition Government’s promises to end petrol rationing and give a better deal on road grants and petrol tax.

At the end of the war RACA took the decision to cease its road service operations. The NRMA’s growth had made its rival operations considerably wider in scope and reach. RACA’s members were better served by an agreement concluded with the NRMA whereby RACA membership included entitlement to full NRMA services, an arrangement that still exists today. For many years an NRMA officer was based full-time at the RACA Club House.

Recent history

Growth

The NRMA continued its growth and success as a motoring organisation and insurance company through the second half of the century, becoming the largest general insurer in Australia.

Board conflicts

Starting in the 1980s and continuing for the next two decades the board of the NRMA was torn by a series of high profile conflicts, fought both in the media and the courts.

Demutualisation

The combination of NRMA's continued financial success and ongoing board conflicts led to the proposal of demutualisation, first anticipating and then riding the wave of demutualisations that swept Australia in the 1990s.

NRMA Insurance's financial success led to a surplus in funds which could not easily be distributed back to members. Insurance premium rebates to members had the effect of artificially and harmfully deflating the price for NRMA's insurance products. Demutualisation, whereby members exchanged membership rights for shares in a listed company, allowed funds to be distributed to members without affecting longer term product pricing.

At the same time demutualisation would address the perceived corporate governance issues that centred around the long-standing board wars. For example, instituational shareholders (who out of necessity would become significant owners of the large, newly listed company) would likely enforce a greater level of rigour and discipline on the board of directors.

When demutualisation was first proposed in 1994, conflict on the NRMA Board was described by an independent report as "of such magnitude and nature that it is debilitating to the organisation and potentially destructive". This first demutualisation, dubbed "Share the Future", was derailed by a successful court challenge mounted by some of the board's directors and was supported by a minority of the membership. "Share the Future" proposed demutualising the entire company, ie both insurance/financial services and membership/road service. Member concerns centred around possible increases in insurance premiums and road service fees and decreases in service quality brought about a more profit-oriented company.

After much discussion and some acrimony, the NRMA successfully demutualised in August 2000, forming two separate organisations in August 2000 - National Roads and Motorists' Association Limited, and NRMA Insurance Limited (later the Insurance Australia Group Limited).

Separate paths

National Roads and Motorists' Association Limited (now trading as NRMA Motoring & Services Ltd) remains a mutual company owned by its 1.9 million members.

Insurance Australia Group Limited is a listed company owned by its shareholders. It has a number of operating subsidiaries using the NRMA brand, including NRMA Insurance Limited, as well as a number of other insurance and related brands.

Further information

Broomham, Rosemary (1996). On the road: The NRMA's first seventy-five years Allen & Unwin. ISBN 1864480084