New York City Council’s Transportation and Infrastructure Committee held a supervisory hearing on Monday, February 10, to discuss the current situation of the yellow cab industry. The hearing focused on the development of the taxi industry, congestion surcharges, and potential impacts on the industry, as well as related legislative considerations.
One local law proposal, Intro 1050, aims to amend the “Administrative Code of New York City” to restrict the liability insurance requirements imposed by the New York City Taxi and Limousine Commission (TLC) on its licensed vehicles, prohibiting the TLC from requiring vehicles to be insured for personal injury protection (also known as no-fault insurance) in excess of $50,000 as prescribed by state law.
Council Member Carmen De La Rosa stated that the taxi and for-hire vehicle industry support numerous working families. However, with the industry’s largest insurer, American Transit Insurance Company (ATIC), facing financial collapse, the livelihoods of over 74,000 drivers are at risk. She introduced the Intro 1050 bill to lower insurance requirements to prevent the consequences of ATIC’s bankruptcy.
She mentioned that taxi drivers have extensive experience, spend thousands of hours on the road each year, and are subject to additional supervision by the TLC. The bill aims to reduce the requirement for personal injury protection from $200,000 to $50,000 to align with statewide standards, reduce drivers’ out-of-pocket costs, and make the insurance market more accessible. She emphasized that while this is not a cure-all for industry issues, it is a tool in the toolbox that requires amendments by state legislative bodies and reinvestment by all industry stakeholders.
Former TLC Commissioner Matthew Daus stated that New York City’s insurance system has long-standing issues, with a market rife with misinformation burdening drivers. He supported the Intro 1050 bill, believing that lowering the Personal Injury Protection (PIP) insurance limits is a key measure to improve the insurance environment for the taxi industry.
Uber spokesperson Freddie Goldstein mentioned that New York City taxi drivers pay four times the PIP insurance fees of other drivers, yet TLC data shows very low rates of serious accidents among them. Uber and Lyft drivers are covered by the Black Car Fund, leading to less demand for PIP. He argued that reducing the PIP insurance limit from $200,000 to $50,000 could save drivers $600 a year and alleviate financial pressure.
Lyft’s Head of Public Policy, Jeff Berman, also stated that lowering the PIP insurance limit would not affect the protection of passengers or pedestrians as liability insurance could still provide compensation. He believed that high PIP insurance amounts encouraged fraudulent claims, driving up driver costs, and thus supported the passage of the Intro 1050 bill to lower insurance requirements, promoting market competition and stability.
Peter Mazer, General Counsel of the Metropolitan Taxicab Board of Trade, pointed out that the higher liability and no-fault insurance limits required for New York City taxis and other for-hire vehicles compared to those in other parts of the state are due to TLC regulations. However, these excessive insurance limits have become a “magnet for fraud” for illegal claimants, healthcare providers, and unethical lawyers, leading to rampant fraud and severely eroding the integrity of the for-hire vehicle insurance market. The exorbitant insurance costs have had a devastating impact on the taxi industry. Recently, Uber and a major for-hire vehicle insurance company have filed lawsuits in federal court against some fraudster groups, highlighting the severity of the insurance fraud issues facing the for-hire vehicle insurance industry.
Mazer believed that the Intro 1050 bill would align the minimum insurance requirements for taxis with the same standards as other for-hire vehicles in the state, helping to curb some fraudulent activities.
A driver named Wayne Chen testified, expressing his belief that the $200,000 insurance coverage should be maintained as drivers lack workers’ compensation insurance and need this protection to compensate for work-related injuries. He feared that if injured, he would lose income. Another driver, Richard Chow, shared his experience of being injured in an accident and forced to continue working, criticizing the bill for reducing insurance coverage from $200,000 to $50,000 to save $600 in premiums annually, significantly diminishing drivers’ protection.
Carmen Cruz from the New York Taxi Workers Alliance also stated that drivers are not willing to compromise insurance coverage for a $600 premium reduction as it would expose them to higher risks. She criticized the corporations advocating for the bill, suggesting they should provide raises rather than cut drivers’ insurance coverage.
Bhairavi Desai, Executive Director of the New York Taxi Workers Alliance, also expressed concerns about the Intro 1050 bill. Desai emphasized that owner-drivers and leasing drivers of yellow cabs do not have sufficient workers’ compensation insurance, making PIP or no-fault insurance crucial for their safety net. She believed that the proposal to lower insurance requirements primarily came from Uber and its supporters to reduce fraudulent claims, but there is no publicly available data to support this claim.
Additionally, Allison Langley, a lawyer for the New York Taxi Workers Alliance, mentioned that despite the end of the COVID-19 emergency, the yellow cab industry has not fully recovered, with daily trips only at 55% of pre-pandemic levels.
Langley indicated that the court recently mandated all vehicle owners and drivers to use accessible vehicles, but the high cost of replacing old vehicles with accessible ones is burdensome, making it difficult for drivers to afford new car expenses. The Taxi Improvement Fund (TIF) of the TLC also faces a funding shortage, which is financed through surcharges on taxi rides, not only failing to fully cover the difference in purchasing new cars and operating costs but also facing bankruptcy this year.
She urged the city council to provide more financial support, as the court order would not increase the number of accessible taxis on the streets but rather decrease the overall number of operating taxis.