| NRMA has received many enquiries from Members asking us to explain NRMA board director Richard Talbot’s involvement with Budget Direct Insurance. NRMA President Alan Evans responds to your concerns.
In recent months, I have received numerous letters, telephone calls and emails from Members very angry about board director Richard Talbot’s continuing endorsement of Budget Direct Insurance (BDI). |
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Members have asked why one board member is promoting another company’s products. At the same time, the rest of the board has been working hard to ensure Members get a fair deal on petrol, more funding for roads and a better deal for Members from NRMA Insurance.
Members have asked and deserve answers to the following questions:
Mr Talbot attended a board meeting by phone last May but did not tell the board at that time that he had entered into an arrangement to personally endorse BDI for financial benefit. BDI is a private insurer – with operations in South Africa, the United Kingdom and Australia – and sells insurance in Australia.
Just days later, letters began to be received by Members across NSW from Mr Talbot personally endorsing BDI.
Let me make it perfectly clear, Mr Talbot did not get Member addresses from NRMA. We believe that Mr Talbot, or people associated with him, may have purchased general mailing lists to distribute the letter.
In return for his endorsement, a company partly owned by Mr Talbot receives a commission for premiums received by BDI in excess of $1.129 million.
Why is this damaging to NRMA? First, BDI’s motor insurance product is a direct competitor to NRMA Insurance. More than 35% of our memberships are sold through the NRMA Insurance network and, while NRMA Motoring & Services and NRMA Insurance are two separate and independent companies, we have mutual commercial interests. More than half of NRMA’s two million Members are NRMA Insurance policyholders and, as a result of demutualisation, a significant number are IAG shareholders. NRMA membership is often sold to customers when they purchase or renew their insurance policies. This puts at risk a vital source of our income.
Second, BDI offers to arrange roadside assistance for people who take out motor insurance. This service is in direct competition with NRMA Motoring & Services’ core business – roadside assistance.
Third, NRMA’s network of Country Service Centres relies heavily on income from NRMA Insurance to supplement the magnificent road service operation that they provide throughout regional NSW. If it becomes harder for our Country Service Centres to survive, road service in country areas could be threatened.
The rest of the board unanimously believes that Mr Talbot’s endorsement of BDI creates a conflict of interest between his position as director of NRMA and his financial self-interest resulting from the endorsement.
So, what has the board done about this? A special meeting was convened where the board resolved to ask Mr Talbot to cease and desist from his endorsement of BDI or resign from the NRMA board. He has done neither.
The Company Secretary and I wrote to Mr Talbot on several occasions asking him to make a full disclosure of his interest as required by law. In each reply, Mr Talbot has failed to disclose the nature and extent of his involvement with BDI and his endorsement of BDI insurance products.
To protect the financial and commercial interests of NRMA, its Members, Country Service Centres and other stakeholders, the Board has been forced to place restrictions on the information provided to Mr Talbot that relates to his conflict, including information relating to roadside assistance.
I would like to stress that Mr Talbot is at liberty to participate as a director on the limited number of board matters to which his interest does not relate. At the last three board meetings, he has chosen not to do so.
At the June board meeting, again all directors asked Mr Talbot to declare the nature and extent of his interest in BDI. Mr Talbot refused to elaborate on his previous correspondence.
At the July and August board meetings, Mr Talbot was again asked to disclose all relevant information relating to his endorsement of BDI. He did not.
The board believes that Mr Talbot should stop endorsing BDI or resign. We believe any reasonable person would expect him to do this.
The board is doing and will continue to do all that it can to protect the interests of Members, staff and Country Service Centres. Mr Talbot will not be provided with information or papers which relate to his interest in BDI and could be of benefit to BDI. This situation will prevail as long as Mr Talbot continues his endorsement of BDI and remains a member of the board. The board is unable to remove Mr Talbot as a director. He can only be removed as a director by a vote of Members.
Alan Evans, President
