This afternoon, the California Department of Insurance (CDI) held a hearing, hosting rideshare programs (namely Uber, Lyft, Sidecar and Wingz) -- regulated in California as Transportation Network Companies (TNCs) -- and insurance industry representatives (from the Association of California Insurance Companies, Personal Insurance Federation of California, and the American Insurance Association). The TNCs answered questions, as a panel, regarding the current insurance situation, TNCs position about insurance gaps, and what TNCs are doing to respond to insurance challenges. Insurance industry representatives, also as a panel, answered questions regarding how exclusions apply to the rideshare situation, risks faced by drivers using personal vehicles, and opportunities that exist in the new industry for insurance companies.
Several important points were raised at this hearing, including a couple opposing views that were brought to light. One such view is related to who should bear the risk/responsibility for carrying insurance. The TNCs argued that the drivers were in the best position to obtain such insurance. However, the insurance industry representatives argued that the TNCs would likely be in the best position to bear such responsibility. Another point of contention was regarding what type of insurance best covers the TNC risks. There was testimony about whether personal or commercial carriers are in the best position to underwrite such coverage. Lastly, there was testimony heard, both from TNCs and from the San Francisco District Attorney’s Office about the type of insurance fraud that has and may arise as a result of TNCs and the insurance issues discussed. With the current state of regulations, insurance carriers are relatively powerless to fight such fraud. Some suggestions were raised that could help insurers fight TNC insurance fraud.
These issues are novel ones for the insurance industry. Many companies, and the industry generally, do not yet know how to address the insurance gap problems, how to properly investigate such issues, and how to change underwriting and claims processes to ensure that companies are not paying out for excluded incidents. We are continuing to monitor any new developments related to this issue, to best serve our clients.