In Australia traditional insurance is to say the least, very difficult to obtain and just as difficult to retain. Insurer interest to cover any form of rider sport activity in Australia is lacking and is not predicted to improve any time soon. For this reason the management of Rider Sport Association (RSA) have tirelessly searched the globe for alternatives to traditional insurance offerings.
As we discovered, there is a better way and it is not new to Australia or elsewhere in the world, in fact insurance alternatives have a long history, with the first originating in the 18th century and with a modern version beginning in the US in 1924. These alternatives are called Mutual Funds, which are owned by members and offer a strong, trusted alternative to traditional insurance companies.
As part of our strategies to ensure that motorcycle sport will always have a home in Australia, the RSA has engaged the services of Regis Mutual Management to establish our very own Discretionary Mutual Fund (DMF). A DMF is simply a member owned, insurance-like product that will 'share' the risk with traditional insurers. A DMF pools the risk of members and leverages the scale of its membership to generate benefits that would be out of their reach under conventional, individual insurance.
The RSA DMF is an ASIC regulated not for profit limited liability company, which does not have shareholders but everything it does is for the benefit of its members. The members can be any and all forms of cycle or motorcycle clubs or businesses, whereby each member pays a contribution to the mutual which is used to pay claims and run the fund. The board makes key decisions such as what to do with any surplus after payment of claims, insurance premiums, administration costs, etc. For example, a fund surplus could be used for the provision and education of emergency management planning, implementation and compliance with the relevant health and safety act and or funding the education of specific members to obtain relevant health and safety qualifications, etc.
A DMF offers a robust structure for claims and risk transfer, and is simply called a redesigned approach to insurance and is the kind of protection that members can have confidence in as it is their fund! As long as enough capital is raised to fund the construction of the DMF, and pay for the first years licence rental, and make contributions to the pool, the RSA DMF can be operational from November 2024.
The Key Differences and Benefits between Mutual Funds and Traditional Insurance highlights the potential benefits of mutual structures, particularly for industries requiring flexibility and member-focused approaches like rider sport events and recreational facilities.
