Here’s what Cycling Australia’s insurance price rise means for you
Late last month, Cycling Australia (CA) announced that the cost of its insurance was set to go up. The insurance company behind CA’s offering had increased its price by 46%, “primarily due to increased claims”.
CA said that it was not “in a financial position to absorb the full cost of the insurance increase” and that while it would do what it could, “the balance of the increase will either be passed through in increased member fees or absorbed by the relevant state or territory association.”
According to CA, it would be up to each state and territory body to decide how much (if any) of the price hike they would cover, or whether the increase would be passed on to members.
With the price rise about to come into effect, CyclingTips reached out to each state and territory body to see what they’ve got planned. While there are differences in how each organisation plans to handle this challenge, there are some common themes that come through in the responses you’ll read below.
It’s clear that there’s considerable frustration directed at Cycling Australia, for not covering the cost of the price increase (insurance is seen as CA’s responsibility) and for getting into a poor financial position in the first place. The organisations that have committed to covering the shortfall seem to be doing so begrudgingly — they don’t want to, but overriding that is a desire to protect their members from the price increase.
Along the same lines, there’s an acknowledgement from several states that the current arrangement isn’t sustainable. The cost of memberships (particularly racing licenses) is too high, which is acting as a deterrent to many would-be racers. There’s a feeling that things need to change.
On that note, read on to see what CA’s insurance price hike means for you.
Cycling Victoria
The bottom line:
Cycling Victoria will “absorb the majority of insurance premium increases” leaving CV members with a 6% price increase, on average.
The full response:
“The Cycling Victoria Board has voted to absorb the majority of insurance premium increases from July 1, 2019.This follows Cycling Australia’s announcement on Friday that insurance premiums would rise by approximately 46% from July 1, 2019 with the majority of the increase (80%) to be passed directly on to the State Sporting Organisations.
“Unfortunately, there’s no good outcome here for our members,” explained Lisa Byrne, President of Cycling Victoria. “Either we pass on the full amount and they are out of pocket immediately or we absorb the costs and our Profit and Loss is hit by $100k.
“Given we are a not-for-profit and target only to break-even each year, this means we essentially have $100k less to run programs and support services, which is unacceptable. In the short term, we will be reducing our reserves to fund this gap while we consider other funding options.
“Cycling Victoria calls on Cycling Australia to deliver value to its members through a negotiated insurance reduction. Indeed, this would be a great way for Cycling Australia to demonstrate the value that the OneCycling model can unlock for members.”
The insurance premium changes mean that membership for our Victoria-based members will increase from July 1, 2019 by approximately 6% on average.
Cycling New South Wales
The bottom line:
Cycling New South Wales (CSNW) will tell Cycling Australia that it “does not wish for members’ fees to increase.” CNSW has not committed to absorbing cost increases.
The full response:
“On Friday, Cycling Australia informed its members that its insurance premium would rise, leading to an increase in member fees from 1 July 2019.In its release, Cycling Australia said, “Cycling Australia is not … in a financial position to absorb the full cost of the insurance increase. Nonetheless, we will make all the contribution we can to fund the increase. The balance of the increase will either be passed through in increased member fees or absorbed by the relevant state or territory association.”
Currently, a portion of a member’s fees goes to that member’s club (the “club fee”), a portion goes to the state federation (the “state fee”) and the remainder goes to Cycling Australia.
Yesterday, the board of directors of Cycling NSW (“CNSW”) passed two resolutions in response to Cycling Australia’s release.
First, the CNSW board will communicate to Cycling Australia that CNSW does not wish for members’ fees to increase.
Second, the CNSW board wishes to clarify that if Cycling Australia does pass through the insurance costs by increasing member fees, there will have been no increase to the state fee received by CNSW from NSW members.
Insurance has always been, and remains, the responsibility of Cycling Australia. The CNSW board understands that while Cycling Australia may have sufficient finances to cover the increased insurance premiums, it is Cycling Australia’s prerogative to decide how it spends its money.
CNSW will continue to advocate for improvements to insurance and membership offerings for its members.
Cycling Queensland
The bottom line:
Cycling Queensland will pay for the entire shortfall “to avoid any increase to our members’ licenses.”
The full response:
“The Cycling Queensland Board have unanimously agreed to pay the shortfall to Cycling Australia to avoid any increase to our members licenses. Our Treasurer has advised that while this will significantly affect our financial position, we can afford it.Whilst we are in a position to avoid these increases, we feel it is our mandate to do so.
We believe the timing of this increase is not fair on members.
The CQ Board is concerned the increase proposed by Cycling Australia would result in a reduction in our membership, cause major discord in the organisation and membership and undermine Cycling Queensland’s and our Clubs good work.In addition, we feel an Elite racing license over $420, and a Masters racing license over $320 is not acceptable.
CQ is investing in growing our membership through a new Membership focused staff member, cultural improvements and providing a better membership experience, all which will assist to counter this unforeseen expense.
There is strong dialogue occurring between CQ and CA to better manage our risk, provide transparency and accountability, and have a full review around the membership products and pricing.
Cycling South Australia
The bottom line:
Cycling South Australia will “absorb the majority of the premium increase”, but membership prices will increase by an undetermined amount.
The full response:
“Cycling South Australia is committed to providing our members with the best value membership that we can. Insurance premium increases are typically hard to predict – and the circumstances which have led to this most recent increase in Cycling Australia’s premiums are certainly tragic.Unfortunately, CA is unable to absorb the entirety of this increase due to a lack of cash reserves left by previous administrations. As such the sport is in a position that it has fallen to the states to pay for the remainder of the increase. While Cycling South Australia will absorb the majority of the premium increase on behalf of our members, a small portion of the overall increase will need to be covered by an increase to our membership fees at the beginning of the 2019/20 fiscal year (existing 12 month memberships will be unaffected for the duration of their 12 month period).
We recognise that the current system of insurance is volatile, and look forward to working with CA to see how we can evolve the membership offering into something that will be both sustainable for the organisation, and valuable for the individual member.
Cycling Tasmania
The bottom line:
The price increase will be passed on to members.
The full response:
“[Cycling Tasmania] have still not reached agreement with CA in regard to our increase.We are a very small state and can’t afford to absorb any increase, so any increase as a result of the insurance increase will be passed on to members. We are very disappointed that CA have failed to manage their expenses which will ultimately result in increased membership fees which will create another barrier to increased participation.
We are aware that CA will conduct a review of their Insurance products and would strongly support a dilution in insurance cover as we are aware many members may already have adequate cover like death cover/income replacement and would prefer not to pay increased membership costs for unnecessary insurance coverage.
WestCycle
The bottom line:
WestCycle will subsidise “a large portion of the increase” — in most cases, two-thirds of the cost increase. Membership prices will increase slightly.
The full response:
“As per the email you would have received from Cycling Australia last week, there has been a significant increase to the insurance premium that Cycling Australia pays as part of membership. This increase is a direct reflection of a rise in claims against the policy over the last 12 months. It’s not something that Cycling Australia have control over.As you will no doubt be aware the total membership fee that you pay includes a large component that goes to Cycling Australia. This component is there to include the insurance component that they pay. Unfortunately, Cycling Australia have indicated that they are not in a financial position to absorb this increase and as such one proposed option was to pass on the increase to Members. The magnitude of the increase would have meant a dramatic increase in Membership fees, which would have resulted in an Elite license increasing to $400 and a Masters license to $300. This is not an acceptable position.
WestCycle, along with other State bodies have been in discussions with Cycling Australia over this matter for well over a month to try and find a solution. The truth of the matter is it is Cycling Australia’s responsibility to pay for insurance and it always has been.
WestCycle has made the decision to subsidise a large portion of the increase to reduce the impact on our Members.
From 1st July 2019, there will be an increase to Membership fees. We have worked hard to keep this at a minimum. In most cases, we will be paying two-thirds of the increase in cost.
On a final note, we are more than aware that the current price and structure of membership is not sustainable. Our goal is to remove barriers to membership and event participation. We are working hard on a solution to this, but for now, we understand the significance of any increase and as such have done all we possibly can to reduce the impact of this.
Cycling ACT
The bottom line:
No decision has been reached yet.
The full response:
““The matter is under consideration and … we have no other comment at this point.”
Cycling Northern Territory
The bottom line:
Cycling NT is still “sorting out the finer points” of its response.
The full response:
No official statement provided.
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