NRMA Demutualisation.

Essay by davidpak86University, Bachelor's September 2005

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This essay is based on one of Australia's leading insurance company 'NRMA'. NRMA faced demutualization in August 2000, and went from a mutual company into a company which is owned by the company itself, this is called demutualization. Topics such as ethics, social responsibilities as well as the company's decision-making will be discussed and critically analysed.

NRMA Insurance has been one of Australia's leading insurance companies for decades, they have provided services for over 80 years and are still running strong. Although NRMA Insurance has been running for this long period of time, there has been a major change that occurred in August 2000. ( The major change that NRMA took place was demutualization. According to the Guardian Unlimited website, demutualization takes place when "a mutual society, which is owned by its members, becomes a public company owned by its shareholders", in most cases, when a company faces demutualization, members sometimes receive a windfall profit, examples of these are when companies such as 'Woolworths' converts itself to a another company which is totally different to what they do.


NRMA itself states that in this case of demutualization, members will still remain members of the company and still receive the same benefits as well as gaining some sort of windfall profits via shares, although they have stated all the pro's, they have still left out the cons. Most members didn't know nor were they given much information about long term effects towards this major change. But now that this change has taken place, there have been much bigger financial difficulties in which NRMA is facing at the moment. As stated by Mr. E. T. PAGE, NRMA have had a massive increase of higher management controlling the company. (, Before the demutualization took place, NRMA was owned by four main people,