Tad Borek wrote:I just saw a summary of a recent (Nov 2008) USA Cycling meet-up on Nebraska's web site, which Google landed me on when I was looking for something else. This was part of the summary:

Was anyone from NCNCA at this meeting and was that discussed at all? It's a lot for a license already, and that reasoning for the extra 10 beans doesn't seem to add up...it's an extra $630,000 which is in itself more than enough to self-insure these claims they're talking about.

From USAC's last tax filing on Form 990 the organization looks pretty flush these days so I don't get why the already too-expensive license is getting even pricier.

I don't dispute the insurance stuff/costs but what is the purpose of the around eight million surplus/investments they've had at least the past three years or so? What's the rainy day scenario?

Per the 2007 USAC 990 for the cost of insurance was $874,763 in 2007. I believe that the liability payments mentioned of 700K are over and above the cost of the insurance. I know many years ago when I was on the USCF board the insurance was set up where USCF had to pay X amount on claims before the insurance company stepped in. If I'm correct then the Cost of insurance plus the liability claims paid comes to close to 1.6 million. When I was on the USCF board back in the late 90's the daily insurance surcharge only covered about 2/3s of the cost of insurance.

Also I'm not sure where you get the 63,000 member number but that number is to high. USCF has about 42.000 members and NORBA has a bit under 15,000. Now a lot of NORBA people are also USCF members so you have to subtract the duplicates out to get the true number of individuals. There are also officials, mechanics coaches who may or may not also be racers who are probably counted in the total number of USAC members but will not be affected by the $1 per rider per day insurance surcharge.

casey wrote:If you have read the email from the USAC CEO you know there is good news and bad news. The good news is that license fees will remain the same next year. The bad news is the USAC insurance surcharge will go up to $3 per rider per day. If you race more than 10 times in a year you would have been better off with the increased license fee ( assuming that promoters will be passing this increase along in the entry fees).

It looks like a similar amount for the increase either way, $1 x 600,000+ race days vs $10 x 63,000 members.

If ~600k was needed to cover liability insurance increases, I guess it does make sense to raise it that way instead of in the license fee. More race-days means more chances to hit a pothole, fall down go boom. Kind of like car insurance, cheaper if you drive 2k miles/yr vs. 50k.

So now there's $1.8M+ raised from race-day surcharges...vs $700k in claims paid. Not counting any legal costs I suppose, or the cost of insurance against a $20M whopper kind of claim that could shut down the whole sport if it happened. But I still wonder how all these figures add up and how/whether ol' SueH fits in.

-Tad

If you have read the email from the USAC CEO you know there is good news and bad news. The good news is that license fees will remain the same next year. The bad news is the USAC insurance surcharge will go up to $3 per rider per day. If you race more than 10 times in a year you would have been better off with the increased license fee ( assuming that promoters will be passing this increase along in the entry fees).

I'd be willing to throw in a few more ducats for a lobbyist.

aaaahhh ~ those halcyon days of ncnca independence ...

casey wrote:Over the past several years it has been the cost of insurance, mainly the secondary medical insurance, that has been driving the cost of licenses up. Most of the costs for your license goes to pay for the liability and medical insurance coverage that races need in order to happen. Without the insurance there are no races. Needless to say each year it seems the medical insurance claims keep going up which in turn drives up the cost of the medical insurance coverage.

The stock market decline is a double hit to USAC since it is driving increases in the cost of insurance. Since the insurance companies are seeing losses on their investments the insurance companies are having to raise rates to cover the money they are losing from their investments.

Also remember that there might be issues like reduced sponsorship income.

Casey, thanks for the reply. The 990 tax filings have me wondering how they could justify increases at all, unless something else changed a lot in 2007-08. Revenue from licenses + insurance surcharges has been well above what they list for total expenses (including health/liability insurance and claims), and they had big surpluses before 2007. During 2005-06 the total surplus was $1.0 + $1.4 = $2.4 million, which looks like they collected $40/member more than they needed to, even after paying those increased insurance costs. License fees went up after that, which should have raised another $1M+, leaving a lot of room for insurance increases above the 2006 levels (50%?). So when Todd Sowl says claims went up $200k in 2008, and USAC needs another $630k from us in 2009 ($10 x 63,000 licenses) it doesn't add up. Unless that claim figure and the program-expense figure doesn't reflect all claims & insurance costs.

I don't think it's the stock market though. A foundation might have seen stock market losses, but USAC Inc shouldn't have any because at least as of 2006 all of their investable assets were in cash and short-term investments ($4.8 million cash, $2.3 million s/t). Which in my experience is typical for a nonprofit like this, where investment income is not really a source of funding for programs. Maybe the cash got wrapped up in something that blew up but if so we members need to know about that, and maybe somebody needs to sue somebody for losing the cash reserves.

If it's health insurance/claims, I don't know where that cost is showing up. Those claim figures from the Nebraska site aren't that high, and only rose $200k this year. That was more than covered by last year's license increase.

I saw on that Nebraska page that USAC plans to issue its first annual report, maybe that and the 07 990 will shed some light. If that surplus just keeps going up we should storm the Bastille, we all have better things to do with our money!

-Tad

Tad

I haven't heard back fro the NCNCA Rep at the Local Associations meeting yet ( Robert Leibold) but I got an unofficial briefing about the license fee increase that had more Info than the source you posted above.

Over the past several years it has been the cost of insurance, mainly the secondary medical insurance, that has been driving the cost of licenses up. Most of the costs for your license goes to pay for the liability and medical insurance coverage that races need in order to happen. Without the insurance there are no races. Needless to say each year it seems the medical insurance claims keep going up which in turn drives up the cost of the medical insurance coverage.

Have you paid any attention to what the stock market has been doing lately? Due to the nose dive of the stock market the value of the USAC investments has gone down just like everyone else. I can't say how much the value of the USAC investments has gone down but it is a pretty large number. It is probably safe to assume that the USAC investments have gone down in an amount similar to how much your personal 401K fund has gone down.

The stock market decline is a double hit to USAC since it is driving increases in the cost of insurance. Since the insurance companies are seeing losses on their investments the insurance companies are having to raise rates to cover the money they are losing from their investments.

Also remember that there might be issues like reduced sponsorship income. I know that the year after the Summer Olympics is traditionally the low point in the sponsorship income cycle. Given the poor economy sponsorship dollars are probably even tighter than normal. I haven't heard anything about reduced sponsorship being a problem but this could also be a financial issue that USAC is dealing with.