Taxi companies and drivers in Newfoundland and Labrador say they are nearly driven out of business by the high insurance premiums they have to pay, no matter how good their driving record is.
In fact, 95 per cent of taxi owners in the province pay insurance premiums between $8,000 and $12,000 per year, and can get insured only through Facility Association — an organization in which voluntary insurers co-operate to provide insurance for vehicle owners and/or drivers who, without the arrangement, would have difficulty obtaining insurance.
Don Earle of Goulds Taxi in St. John’s told the Public Utilities Board (PUB) when he met with it in April that the smaller taxi company licences are being bought up by larger companies, mainly because the insurance rates are driving the smaller companies out of business.
“These big companies now want a monopoly on the taxi industry,” said Earle, who has been in the taxi business for more than 20 years.
“Four or five years ago, you couldn’t buy a taxi licence. There was none to be bought.
“All these little independent drivers are dropping off like flies because they either can’t afford to pay the insurance or, like me, just can’t justify (paying) it.”
Earle said that five years ago his insurance premium for two vehicles for his taxi business was $3,850. Currently, for three cars, it’s $17,000 plus tax.
Earle said he has a clean driving record, and so do both drivers who work for him, yet they are all lumped in as high risk just because they are in the taxi business.
He said the bad taxi drivers should be the ones charged more and eventually weeded out of the industry. That, he said, would result in fewer accidents.
The PUB is in the midst of public hearings on a review of automobile insurance in the province, including the reasons behind increasing claims costs for taxi operators. The board was asked to examine the impact of introducing a monetary cap on claims for minor injuries, or continuing with the current deductible of $2,500, or increasing the deductible.
On Monday, James Cameron of Cameron and Associates Insurance Consultants outlined a taxi claims review report his company prepared for the PUB.
The company conducted a claims file review involving taxi-cab losses for the years 2010 to 2016 in the province.
Cameron said the conclusions included: the claims were handled properly by the insurers; there were a significant number of drivers of the taxi-cabs who were not listed on the policy; there were significant delays in reporting of claims; bodily injury claims were predominantly soft-tissue injuries; the current deductible had no impact on the loss results; and changes to the product, such as minor-injury compensation caps, increased deductibles, minor-injury treatment protocols, and verbal and monetary thresholds should have a significant impact on loss costs.
Taxi operator Doug McCarthy said the province’s taxi industry is facing a “do or die” situation regarding insurance.
McCarthy suggested to the PUB a number of things — risk management measures — that could help turn things around. Those included: that taxi drivers be at least 25 years of age, have a five-year clear abstract, have five years’ Canadian driving experience and do a driving test; introduce a novice taxi licence; mandatory winter tires; and that insurance premiums be based on a driver’s driving record.
Jerome Kennedy, a lawyer representing the Campaign to Protect Accident Victims, asked Cameron why, when writing the report, he did not look at the insurance rates taxi operators pay in the province.
“You didn’t see it as part of your job to look at the actual rates that these taxi drivers were paying and to see if there was a way that — from a practical perspective — those rates could be reduced?” Kennedy asked. “Wouldn’t that be a starting point when you have an individual coming forth and saying, ‘I’m paying $12,500 per car,’ or, ‘I’m paying $8,200 per car’?”
“My mandate was restricted to look at the claims and to determine if the claims were handled appropriately and if there was anything done in that claims handling process that impacted the results negatively,” Cameron replied.
Kennedy noted, however, that the report does make suggestions in relation to alternative solutions to claims losses, such as a cap, verbal thresholds and higher deductibles, and suggested they were put in the report as a view to reducing rates or reducing premiums.
“I put those out there as — just in the event that it would help the discussion — because I have had experience, and my team has had experience, with various jurisdictions on caps from the practical experience,” Cameron said. “I’m sure you’re hearing on the actuarial side how they worked, but from the practical claims experience approach, I thought that would add some value.”
In the report’s executive summary, it states that, “without some major changes to the product, such as increased deductibles, minor-injury caps, verbal thresholds or prescribed framework for treatment of minor injuries, the loss experience is highly unlikely to improve.”
In answer to further questions, however, Cameron agreed that with the imposition of such changes, victims of accidents might lose their rights.
Lara Fraize-Burry, a lawyer representing Spinal Cord Injury Newfoundland and Labrador, asked Cameron if mandatory risk management measures would be as effective as the implementation of a minor-injury compensation cap or increased deductible at decreasing the number of accidents, thus reducing claims costs and eventually decreasing premiums.
“Risk management, reducing losses, I mean that benefits everyone,” Cameron said. “The fewer accidents, the fewer people get hurt.
“Risk management should always be used in trying to control the losses, and control them by not having them should always be the first and foremost approach. Having said that, there still are always accidents.
“They will happen despite all the best risk management practices, there will be claims and there will be losses, and it’s a combination of two things. If you impose on accident victims these severe controls, they are severe measures to restrict the rights of victims, yes. You give up your right to claim in a minor injury situation, to claim a lawsuit for general damages, you give up that right in exchange for keeping the premiums under control in exchange for not paying $12,000 a year for insurance. It’s a trade-off, they all work together, they’re all like balls in the air. It’s a pretty complex situation, actually.”
