(Bloomberg) --New York Governor Kathy Hochul proposed measures to stabilize the city's taxi and rideshare insurance industry, which is reeling from the insolvency of its largest provider American Transit Insurance Co.
Two of the
The company's decades-long practice "has driven out competition and left many drivers stuck paying for undependable coverage that cannot pay their claims when they need it," Albert Pulido, the state's deputy secretary for finance and technology, wrote in an email to industry participants Tuesday viewed by Bloomberg News.
"While these actions alone will not solve a complex, 40-year old problem, they are bold steps to begin to address these issues and build a stable insurance market that serves and protects drivers and passengers," he wrote.
A spokesperson from the governor's office confirmed the contents of the letter.
The proposals follow a November meeting held by state officials and industry stakeholders to discuss solutions to address ATIC's insolvency.
Read more:
ATIC has sought regulatory approval to raise rates as part of measures to re-mediate its financial situation, though driver representatives and rideshare companies including Uber Technologies Inc. have warned it would increase drivers' expenses and make rides more expensive for consumers.
"This is a good first step" for the government to admit the problem after four decades, said Uber spokesperson Josh Gold. But the proposals don't address underlying problems in the legal system that encourage fraud and abuse, he added, and only allow for premiums to keep increasing over time.
"Even if the premium increases are gradual, what's really needed is premium subsidies since the cost will likely add up to something significant," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, which represents more than 28,000 drivers.
