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How the taxi industry plans to deal with a lack of insurance coverage


March 6, 2020   by Greg Meckbach


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There is a movement afoot to set-up a mutual insurer or something similar, by which Ontario taxi operators can self-insure the commercial auto insurance they need.

“We are going to take a new approach, which is self-insuring,” Yellow London Taxi Inc. CEO Hasan Savehilaghi told Canadian Underwriter.

The idea is for different taxi companies to get together and collectively own the insurance company.

“We just want to eliminate insurance brokers out of the picture,” said Savehilaghi. “The main waste, from our understanding, is coming from there. We want to eliminate this gigantic cost they have for fancy offices … they apply extra charges and surcharges. We just don’t know – what is really the positive role of insurance brokers?”

Yellow Taxi plans to get together with other Ontario taxi firms to look for a law firm that sets up captives, licenced insurers, and similar entities.

“We are working on the idea. It is still a raw idea but we took initial steps,” Savehilaghi said in an interview about availability and recent pricing trends in taxi insurance. “At some point we will have to have a name for it. We will have to explain how it works.”

Yellow Taxi does not itself buy the commercial auto insurance. It’s the owner-operators of taxis affiliated with Yellow who buy their insurance. Until this past fall, his London, Ont. cabbies were paying in the neighbourhood of $6,000 a year. But then on renewal, many saw prices go up to about $8,000 or $,9000, Savehilaghi said in an interview.

“All of a sudden, with absolutely no explanation to us, no reason provided to us, the insurance premium in London increased by 45%.”

This happened to some with 10 days or less to renew.

Moreover, Savehilaghi  reports some Toronto taxi owners are paying about $18,000 a year in insurance premiums and province-wide, many have to go the Facility Association for coverage.

Savehilaghi plans to meet with other Ontario taxi firms to further refine the idea of a mutual or some sort of self insurance.

“The whole idea is we are not going to do it for profit,” said Savehilaghi. “It’s going to be money invested from owner operators. Taxi companies will have no direct control over it. We will have licenced people who know about the concept and about the business. They will run it. They will be paid for it.”

“That is not going to be very much welcomed by the insurance industry, but it is going to be absolutely game-changing, at least in Ontario, and we are hoping it is going to be followed in other provinces in Canada.”


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10 Comments » for How the taxi industry plans to deal with a lack of insurance coverage
  1. Jan Stamnes says:

    Interesting article, in the early sixties, Ontario Taxi companies created their own mutual company calling it Bel Air, reflecting the fact that Chevrolet Bel Air was models were utilized as the primary Taxi cab.
    Eventually as we all know, Intact purchased the mutual creating their direct marketing arm.
    Will we eventually see another Intact subsidiary called “Prius Direct”.

    All kidding aside Taxi companies will have a tough go considering that many insurers are offering much lower premiums to Uber type drivers. I’m surprised that in this article that the Yellow Cab CEO didn’t comment on that issue.
    As for not valuing what insurance brokers can do, he sorely misunderstands what a broker that specializes in his industry can accomplish.

  2. Lawrence Gill says:

    Good Luck with your idea Savehilaghi. It is harder then you think

  3. Tony Callaghan says:

    I don’t think it’s Broker’s causing the issues. It’s plain and simple losses. When their premiums aren’t enough to pay the claims then the premiums go up…simple as that. Think of all the taxi’s downtown Toronto and the amount of claims they would get into on any given day. The Broker’s are there to stand up for the taxi companies to the insurance companies and oversee their policies..as well as advise them which it sounds like their current Broker did not. If their Broker is dropping off that large an increase 10 days before renewal then they need to find a new Broker…

  4. mario galluzzo says:

    These individuals have no clue as to what they are talking about. They blame the high cost of insurance on the broker who apparently brings no value.

    The high cost of Taxi insurance is due to the high loss ratios from accident benefit claims put in by its drivers.

    I was involved in setting up a captive in Toronto 10 years Ago it was used and abused as the members refused to understand that even a captive is still an insurance company and needs good results to be beneficial to its members.

    It died a needless death due to the attitude of its members not from the commission paid to the brokerage that ran the program.

    Clients need to understand that insurance brokers bring a value added proposition to the table.

  5. Stephen Webster says:

    The provisional government needs to set a insurance company that compete to provide subsidies to wheelchair taxis and bus companies and to smaller trucking companies that may carry passengers and agree to hire new truck drivers to the industry. I was camped out at Queen’s Park from January 24 to March 17 as the current model in Ontario Canada is not working properly. The Federal government should give no more money for wage subsidy to Trucking companies but to use that money for wage subsidy for transit drivers on the first 75 percent of the first 34 dollars per hour and the balance of Trucking companies wage subsidy used to assist with premium for wheelchair vans and wheelchair bus insurance premiums and set up a nonprofit organization to insure in provinces that do not have prov. run insurance.

  6. George says:

    ..I have 41 years in the taxi business. I have not had an accident. Now I am facing the possibility of having to pay of having to pay well over 12000/year on insurance. I may have to get out of the business and let a new person take over. Why am I responsible for the taxi owners that abuse the system?..these people should be disqualified not used as an excuse for the rest of us that have good records. the Government needs to step in and help this industry. We are eyes and ears while we work and help the general public as well as the police in some instances. We have been deemed “essential business” during the pandemic. We need “essential insurance”…Replacing the taxi industry with Uber or similar companies will prove to be a mistake in the long run. In some cases this has already proved to be a mistake…Thank you

  7. George says:

    ..it almost seems like Uber has paid off insurance companies not to write up taxi policies. This collusion is intended to break the backs of the working taxi owner operator and to force them to join Uber. What Uber doesn’t realize is that Uber drivers hand out business cards. Customers call them not realizing these rides are not properly insured. It happened in London England…14000 thousand uninsured rides. Uber was disqualified from operating there. (at least the last report I read) The taxi industry will resist this hi-jacking by Uber. We are going to be here long after Uber and the other ride shares are a long lost memory of a” has been that never was”…People are starting to see Uber is not such a great deal. Lose your wallet, phone, or purse be ready to go “online”..Taxi companies will respind to your phone call and make all efforts to retrieve your items in a timely fashion. One last thought…the taxi industry saves the insurance companies millions upon millions of dollars by driving night revelers home after a night out and thus avoiding accidents. The taxi business should be celebrated not gouged by “facility rip-off..sucker fees”..Government should step in and help us put food on the family’s table…not allow our premiums to go overseas…maintain

    • Jay Jamieson says:

      I am appalled that our city council in Halifax has approved UBER, after all the horrific news and plain common sense that should go into the decision process.
      Why are they not required top have Commercial insurance like the mainstream taxi companies? I’m sure that the general public don’t understand the implications of this. Would you get into a car with someone who didn’t have insurance? The insurance doesn’t just cover the car, it covers your personal damages if you are physically injured. This can run into millions if you become paralyzed or physically damaged in any other way.
      Have they not read the horror stories of some drivers who literally stalk their female clients…now that they know their address? or assault them in their UBER vehicle? Why don’t the UBER drivers have to have criminal record and other checks like other taxi drivers? The answer to many of these questions must be that council members or other senior government officials must be getting paid under the table, just like in other countries. What other reason can explain the allowing of this obvious danger to the public of ‘UBER driving’ ?

  8. William Sibeon says:

    I’m a taxi owner in Huntsville Ontario insured with intact insurance last February I had a claim when a vehicle backed into one of our taxis we were able to drive the car back to my yard as it was across the road I took pictures and sent them to intact showing the vehicle was written off and offered to settle for $3000 . 9 months later and over $18000 in costs and climbing we are still not settled . And we the taxi companies get blamed for raising rates due to costs for claims !

    • Jay Jamieson says:

      There is a clause in your insurance policy that tells you what percentage you will receive if the car is a write-off. Each vehicle has its own depreciation schedule. Check your policy, you could have saved a lot of money.

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