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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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4 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.

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