The Insurance Industry and Regulators Need to Accommodate Ride-Sharing Services
2 November 20, 2014 at 9:01 am by Willie HandlerUber, a San Francisco-based company estimated to be worth $17 billion (U.S.) is aiming to shake up the taxi business in Toronto.
Uber is reported to operate in more than 140 cities in 40 countries around the world, offering taxis, limos and car-sharing services, allowing customers to bypass traditional taxi companies and brokerages to request a ride using their smartphones.
When Uber first set up in Toronto in 2012, city of Toronto officials informed the company that it needed to get a brokerage licence. Uber disputed the request and has been insisting that it is not a taxi service, but rather a technology company, and therefore not subject to licensing requirements. The city has since hit Uber with 35 bylaw infractions and now the city is headed to court in an attempt to get an injunction to shut down the service.
Toronto Mayor-elect John Tory is correct. Uber and similar ride-sharing services aren’t going anywhere. Consumers like these new services and that’s why there are using them. Using a smartphone app, you will be told when the vehicle will arrive, who is the driver, the rating of the driver, the cost of the ride with tip and will allow you to pay for the ride without handling any cash. No need to be standing in the cold or wet on a street corner waving your arm frantically trying to get a passing cab to stop.
The current regulated taxi model is archaic and costly. The city limits the number of plate owners which has created wealth for plate owners who are often not the drivers. The dispatcher system is out of date when technology allows drivers and consumers to link up directly. However, there is a lot of money tied up in the current system. To make matters worse, the regulators appear to be very tied to the existing model.
The one thing that Uber is not short on is money. They will fight this court battle as they have in other jurisdictions. They typically come out on top. Regulators should be designing new regulatory models to accommodate new technologies not fight them. For example the Ontario Ministry of Transportation is working on a regulatory framework for driverless vehicles. The insurance regulator and the insurance industry needs to develop insurance products that reflect these new technologies whether it is driverless cars or ride-sharing services.
The insurance industry needs to recognize that ride-sharing is likely here to stay and properly underwrite these risks to protect drivers and their clients.
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This insurance industry already has a solution for this. It is referred to as the O.E.F. 6A PERMISSION TO CARRY PASSENGERS FOR COMPENSATION ENDORSEMENT. It simply has to be priced commensurate with the UBER/Ride-sharing exposure.
Problem solved.
This is a commerical exposure, why should private passenger auto policy customers share the risk with people profiting from using their vehicle to conduct business. Will Insurers pay third party damages to customers of UBER (ex.Accident Benefits) if the ‘ride-sharing’ driver has not disclosed their participation in these programs. I believe these injuries will be pushed into the Highway Victims Indemnity fund which is not fair for tax payers.