New York officials have told rideshare companies, driver representatives and others in the for-hire vehicle industry th
at insurance policy rates will rise by an average 25% over the next three years, according to people with knowledge of the state’s plans, likely sending passenger fares up as a result.
The state has asked carriers to reset — essentially raise — their fees to actuarially justified levels
as they work to stabilize the industry, which has been reeling from the insolvency of its largest provider, American Transit Insurance Co.
American Transit had, in part, built its almost 60% market share on low policy rates. That has contributed to de
cades-long financial troubles as the company didn’t have enough money to cover the losses it insured, Bloomberg News reported last year.
As part of remedial measures implemented earlier this year, policy rates are expected to increase about 25
% on a weighted average over the next three years, said the people, who asked not to be identified because the information isn’t yet public.
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That would translate to as much as $1,500 more per year for drivers, according to Bhairavi Desai, executive direc
tor of the New York Taxi Workers Alliance, which represents more than 28,000 drivers.
The phased-in approach “allows policymakers and the industry an opportunity to work together to identify
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ways to bear these costs over time, including through potential adjustments to passenger fares,” the Departm
ent of Financial Services, the state’s insurance regulator, said in a memo to members of the industry last week updating them about its policies. Desai and Uber Technologies Inc. confirmed they received the document.
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In an email to Bloomberg, the department said it’s working with carriers to finalize the rate adjustments, whic
h will happen on a rolling basis starting March 1, based on when a driver’s policy renews through
out the year. Policy holders may receive a range of increases since the department has only approved average rate changes for each carrier.
While the state doesn’t have purview to mandate fare increases — the city’s Taxi and Limousine Commission is res
ponsible for determining fare rules, including pass-through costs — the latest notice underscores the conc
erns that driver groups and rideshare companies have raised as inflation already weighs on consumers in an expensive city like New York.
The department said drivers will receive notices of any change to their rates at least 60 days before their policy renewal date.
“Drivers are being asked to bail out ATIC through this steep increase because the state has failed in facilitating alternative carriers,” said Desai. Among other recomm
endations to the department, her group has asked the state to consider the workers’ alliance proposal to seek s
eed funding for a driver-owned mutual insurance company.
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The state, in its memo, said just five insurance companies control more than 95% of the market.
Uber has warned that increasing drivers’ costs could make rides more expensive as they are passed through to consumers. It criticized the state’s measures a
s being inadequate in addressing underlying problems in the legal system that encourage fraudulent practices and lead to higher insurance premiums.
Rather than raise rates in perpetuity, the rest of the government should find out why costs have gone up so much, said Uber spokesperson Josh Gold.
The company has made a multimillion-dollar lobbying push for insurance reforms in the last year. It has also filed racketeering lawsuits around the country accusing law firms and clinics of taking advantage of insurance policies and getting high payouts.