New York officials told rideshare companies, driver representatives, and other stakeholders in the for-hire vehicle industry that insurance policy rates will likely rise by an average of 25% over the next three years, according to people with knowledge of the state’s plans. The expected increase could also raise passenger fares.
What New York Is Asking Carriers To Do
The state asked carriers to reset their fees to actuarially justified levels. In practice, this means carriers will raise fees as part of a broader effort to stabilize an industry that has been reeling from the insolvency of American Transit Insurance Co., which was the largest provider in this market.
Why The State Is Taking This Step
American Transit built nearly a 60% market share in part by offering low policy rates. According to Bloomberg News reporting from last year, those low rates contributed to decades-long financial troubles because the company did not have enough money to cover the losses it insured.
How The Rate Changes May Affect Drivers And Fares
As part of remedial measures implemented earlier this year, policy rates are expected to increase by approximately 25% on a weighted average basis over the next three years, according to individuals familiar with the plans.
Bhairavi Desai, executive director of the New York Taxi Workers Alliance, said the change could translate to as much as $1,500 more per year for drivers. The New York Taxi Workers Alliance represents more than 28,000 drivers.
What Regulators Said About The Timeline
New York’s Department of Financial Services, the state’s insurance regulator, described the increase as a phased-in approach. In a memo sent to members of the industry last week, the department said the timeline “allows policymakers and the industry an opportunity to work together to identify ways to bear these costs over time, including through potential adjustments to passenger fares.”
Desai and Uber Technologies Inc. confirmed they received the memo.
Get the latest insurance market updates and discover exclusive program opportunities at ProgramBusiness.com.