New York City’s For-Hire Vehicles (FHV) industry is witnessing multifarious snags mainly due to the rising
costs of drivers, widespread insurance frauds, regulatory abuse, and imbalanced opportunity, impacting
the livelihood of taxi and ride-share drivers while putting the insurers’ Risk Management Solutions
(RMS) strategies in dire peril.
Presently, over 200,000 drivers operate around 1,000,000 rides each day in New York City, the largest
metropolitan area in the world. The drivers– medallion (yellow) taxicabs, green taxicabs, black cars (both
traditional & app-based services), community-based livery cars, commuter vans, paratransit vehicles, and
some luxury limousines.
The Taxi and Limousine Commission (TLC) is the license issuance authority. American Transit Insurance
Company (ATIC), which provides specialized coverage for livery and commercial auto insurance, insures 65% of
NYC’s for-hire vehicles followed by Hereford Insurance Company (19%), Affirmative Direct (5%),
Accident Fund Insurance Co. (7%), Maya Assurance Co. (2%). All others – each has 1% or less, according to
to the TLC’s insurance database.
It makes complete sense that the current ‘all-time high’ inflation impacts businesses by driving up the
costs of materials and products. This ultimately leads the FHV drivers to suffer badly in the absence of a
strong social safety net, which could provide better healthcare and education supports for their families.
This correspondent interviewed several drivers and tried to analyze factors behind the rising costs
of drivers and factors that drive the costs and how they affecting every aspect of their life. Drivers say
it looks like the industry stakeholders, including insurance carriers, are in the race to hike their fees and
rates phase by phase, brushing aside their affordability.
For a start, a driver has to count numerous fees ($200-350 for education and exams) for TLC and DMV,
while $1,215-1,615 (for buying a car too). In addition to that, other required expenses include: gasoline,
car washes, parking, TLC and traffic tickets, tolls, vehicle maintenance, car lease payment, healthcare
costs, smartphones, and meals on the road. Starting from Jan 5, 2025, drivers will also have to count
additional charges ($1.50 per ride for app-based cars, while $0.75 for traditional taxis and black cars) for
congestion pricing imposed by the Metropolitan Transportation Authority (MTA) on January 5, 2025.
“More expenses, less opportunity,” said Mr. Alamgir Kabir, an Uber driver.
In an interview, Mr. Kabir said, It seems the drivers are being financially drained from all angles. “By all
accounts, drivers fare the worst in the face of rising costs as a result of the elevated inflation and
interest rates. “The regulatory agencies and insurers are increasing the fees and rates without bringing
improvement to the social and economic situation,” he said, adding that new drivers have to think twice
before entering into the TLC market due to the countless expenses. “Driving a Taxi is no longer a lucrative
job…we work hard for the sake of our families, but we are not even recognized as employees, which is
painful.
Uber and Lift take almost 50% (including surcharge, Black Car Fund, Sales Tax) of a trip, he further added.
“The city does not even have adequate arrangements of public toilets for the drivers. We are
experiencing a serious health hazard in the absence of available public toilets. “Before, we used to enter hotels
to use bathrooms, and now none give us access to use them, which poses a major health concern.” Mr.
Kabir pointed it out.
MD Moinul Hossain, another driver who works with a base, said as promised by TLC one year ago to
allow use of the UBER app, he purchased an electric vehicle (Tesla), but he is yet unable to use the UBER app
as per the TLC decisions. “I pay $120 per week, my base, no matter whether working or not. He
calculated a series of his costs – $500 per month, $700 for a monthly car payment, and an insurance
premium of $350. “I do not get paid for wait time with Uber and Lyft, and also when we return without a
customer on completion of rides, no matter how far I drive.” Mr. Hossain, who has been driving since sincesince020 with a
zero accident record, put forward a set of recommendations to benefit the drivers, like the inclusion of
health insurance, 401K to encourage young people to join the industry. “TLC can provide a bonus for us
based on rides clean accident record,” he suggested. Referring to his broker, he said he is not getting the
services as expected. “My broker contacts me once in every six months just to inform my insurance
rates, and the rest of the time there is no communication unless an accident happens “Broker charges fees, but
in return, we do not get any sort of services…we are willing to payfor services, but we expect services.”
Mr. Sumon Modak, an Uber driver who no longer drives, quit driving last year following an
accident. “I was in the red light when I got hit from behind…I had to suffer a lot as a result of the accident,
including paying so many costs and also court hassles and mental distress. I was depressed thinking how
could I run my family amid these situations…Finally, I decided to surrender my TLC plate and quit
driving. “TLC is a headache…yearly renewal is expensive, which many drivers can’t afford,” he added.
Syed Mamun Ali, another taxi driver, expressed disappointment over the escalatinf costs saying taxi
and ride-share drivers are already burning as a result of the rising costs and on top of that app company
Uber Inc. has, of late, brought down the lowest ride to $4 from $5.39, which is hurting us.
This correspondent had the opportunity to reach out to industry insurance company executives to
obtain their comments on the issues in New York’s taxi and FHV industry. One executive said, “We
Believe the hardworking drivers in New York are suffering because of high-cost ratios that have gone out
of balance with the drivers’ economic returns and opportunities. “After all is said and done, the most
important factor influencing road safety and quality of service is the driver. Drivers who are under stress
and overworked are poor performers from a risk standpoint. We need to correct the paradigm so that
drivers can work safely and make a healthy living. “
On Dec 17, 2024, ATIC filed a lawsuit for over $450M, naming over 180 defendants in New York and New Jersey
Jersey. Sources said that many more medical and legal practitioners could be similarly named. American
Transit’s lawsuit seems to show how fraud has become pervasive and normalized in this space that was
originally meant to be helpful to injured parties. It shows that, even with a small portion of providers,
abuse in the No-Fault system can yield a huge number of racketeers, influencers, ss, and CorruOrganizationalons (RICO) charges.
“Insurance brokerages have advantages, the vehicle and permit leasing companies have their
advantages, as do the bases too…everyone has their respective advantages. If the drivers are exploited,
the simple answer is that the leveragee is out of balance with everybody else. Every driver’s
situation is different. There may be 100 different situations that thousands of drivers find themselves in.
There are hundreds of different answers on how to improve the drivers as a group. What are we doing if we
can’t go after every driver’s problem individually? How can we fix your situation when even if we can
do that today, a new problem is going to keep coming up, because of the system which is out of
balance,, said the carrier sources.
Mr. KJ Singh, President and Chief Operating Officer (COO) of Maya Assurance Company, which provides
insurance for commercial vehicles, livery, and non-emergency medical transport insurance, said that currently,
there is a significant crisis in the NYC TLC insurance industry, and things must change. “If not, the new
generation of drivers will bear the burden and the costs. In his recent article published in the insurance
magazine dubbed’ BLACK CAR NEWS’, Mr. Singh said insurance companies can’t survive or new ones
enter the NYC TLC insurance industry under the current New York No-Fault Regulations 68 and current-
pricing.” “The very well-organized, targeted, and abusive claims are the cause of hundreds of millions of
dollars in losses to the insurance companies. There is no healthy balance in the insurance industry, he
said, adding that “The free market works best when things are in balance for the benefit of everyone.
Currently, there is no balance,” he said in the article published on Nov 29, 2024.
The Maya President underscored the need for a strong commitment to drivers for a healthy balance in
this industry. In doing so, he favored a combined effort of the insurance industry, the DFS Governor’s Office,
and other elected officials to make adjustments to Regulation 68 to put an end to its abuse. “t At
the time, it also must provide safeguards and protections from organized abuse. “A newfound
balance will result in a healthy insurance industry, thus reducing costs to For-Hire drivers and still
providing protections to the public, policyholders, and claimants,” said the company executive.
Keith Greenbaum, executive of the second-largest insurance carrier in this space, Hereford Insurance
Compan stressed the importance of creating a stable, competitive, and healthy insurance marketplace
for the entire for-hire industry. While testifying at the just-passed TLC public hearing (Dec 11, 2024), Mr.
Greenbaum stressed the need to stop the bleeding so there are iarefurther insolvency issues in the sector
through adequate actuarially determined rates to incentivize and encourage other carriers to enter into
This marketplace.
This correspondent also testified in this hearing, giving a rundown of his community drivers, depicting
how they are suffering from the rising costs and insurance fraud, and put forward a set of
recommendation, including TLC’s interventions on enacting industry-friendly laws for the sake of the
hard-working drivers, which will not only help improve the livelihood of the drivers but also bring
discipline in this industry.
The bottom line is that it’s an opportunity issue…It’s all about imbalanced opportunities. If drivers a
subject to higher costs, beyond their control, either by inflation, regulation, or at the hands othersher
industry stakeholders with more leverage, then there should be requirements to also improve the
drivers’ opportunities to earn more money. Even with better opportunities, should drivers be forced to bear
bear an unfair share of the financial burden brought about by unchecked insurance fraud?
That’s really true, we’re all bleeding.
That’s absolutely true, we’re all feeling the impact.