The University Transportation Research Center at the City University of New York (UTRC) recently released a report titled, “The NYC Taxi & For-Hire Vehicle (FHV) Insurance Crisis: Root Causes & Solutions,” written by Matt W. Daus, Esq., the UTRC’s Transportation Technology Chair. According to Daus, the NYC taxi and FHV insurance crisis has reached a pivotal point, driven by high insurance premiums that threaten to price-out individual drivers and fleet owners – rooted in the $700 million insolvency of the market’s biggest insurer, the American Transit Insurance Company (ATIC). The report seeks to identify the root causes of the crisis and propose actionable reforms to address the industry’s challenges.
Proposed short-term solutions include:
- Reduce no-fault (pip) limits to state-mandated levels
- Allow excess (surplus) insurance policies to meet TLC requirements
- Expand FHV rental options
- Mandate telematics for risk mitigation and price relief
- Create a safe driver discount
Proposed long-term solutions include:
- Implement tort reform
- Attract new commercial vehicle insurance market players to enhance competition and drive down costs
- Introduce captive insurance models
The report said high insurance premiums “have emerged as a significant challenge for taxi and FHV drivers and fleet owners.” As of 2024, individual drivers faced annual insurance costs between $4,000 and $5,500, while fleet liability policies soared to $6,000-$9,000 annually per vehicle. These escalating costs have reduced driver earnings, threatening the stability of NYC’s for-hire transportation market.
Industry leaders are also pushing for reforms as part of the New York State budget. A letter signed by numerous companies in the FHV industry blames the state’s lack of regulation of the third-party litigation funding industry for contributing to the increase in lawsuits that helped cause the insurance crises and ATIC’s insolvency.
“The struggles of the American Transit Insurance Company – long the insurer of last resort for thousands of drivers – highlights the fragility of a system plagued by rising claims costs, many of which are being artificially inflated by third-party litigation funders,” noted the letter, signed by Uber, Lyft, Revel, Big Apple Car, Livery Base Owners Inc., The Black Car Fund, Midtown Operating Corp., Livery Round Table, and Metropolitan Taxi Board of Trade.
The companies want negotiators to use the must-pass state budget to advance provisions requiring disclosures about litigation funding agreements, cap interest rates and fees, and allow courts to evaluate legal arrangements. Read the full report at: https://utrc2.org/publications/nyc-taxi-hire-vehicle-insurance-crisis-root-causes-solutions.
Source: UTRC
