Is insurance holding back B.C.’s ridesharing opportunities?

Is insurance holding back B.C.’s ridesharing opportunities? | Insurance Business

Is insurance holding back B.C.’s ridesharing opportunities?

The government of British Columbia has unveiled some long-awaited legislation that could allow for ridesharing companies like Uber, Lyft and Grab to operate in the western province by the fall of 2019.

If passed, the legislation will give more authority to B.C.’s Passenger Transportation Board, enabling them to amend licenses to allow taxi companies to operate in various regions. The board will have the authority to set rates and the power to control the number of ride-hailing cars on the road. It will also have expanded powers to accept applications and set terms and conditions for licences covering taxis and ride-hailing services like Uber and Lyft.

Despite B.C. transportation minister Clare Trevena describing the legislation as a “milestone” regulation that “gets ride-hailing right for B.C.,” many ride-hailing advocates have voiced concerns about the extended powers of the Passenger Transportation Board and the restrictive nature of some of the new rules, like the requirement for all ridesharing drivers to obtain a class 4 passenger license.

Timothy Burr Jr., director of public policy for ride-hailing company Lyft, said the requirement for drivers to have a class 4 commercial licence would limit the company's ability to deliver “true” ride-hailing by making it harder for drivers to sign up and comply.

He told The Canadian Press: “Class 4 ignores the reality of how true ride-sharing would work. At Lyft, over 93% of our drivers drive fewer than 20 hours (per week). These are folks who are looking for part-time economic opportunities and they want to use Lyft as additional income.”

Class 4 licenses also require special insurance, which is typically reserved for full-time taxi drivers. According to transportation consultant Victor Ngo, the condition that all drivers hold class 4 licences restricts the flexibility needed to run a true ridesharing company.

The Insurance Corporation of British Columbia (ICBC) has been working with the B.C. government to come up with an insurance solution to support the new legislation. ICBC spokesperson Joanna Linsangan said in a statement: “ICBC has been working with government on constructing an insurance approach that fits the ride-hailing industry model and has been working toward government’s fall 2019 timeline. That work has resulted in the legislation that was tabled on November 19.”

However, the Insurance Bureau of Canada (IBC) has been quite critical of the ICBC, suggesting the insurer is being too slow in delivering a functional product and should therefore open its market to private insurance companies that have already developed insurance products that cover the risk for ride-sharing companies, ensuring that both drivers and passengers are protected.

IBC Pacific vice-president Aaron Sutherland told Insurance Business: “It’s pretty clear that B.C. isn’t getting ridesharing any time soon. In fact, it looks like we’re going to see almost another year’s delay, and a key reason for that is because our monopoly insurer ICBC doesn’t have an insurance product for the ridesharing industry ready to go. That’s the real surprise here. The demand for ridesharing has been clear for so long that you would have thought ICBC would have been working on a product and would have been waiting for legislation to enable that product to come into force.”

Sutherland said that as a monopoly insurer, ICBC isn’t at risk of losing the ridesharing industry’s business and so “they don’t have to burn the midnight oils” to get a product to market as quickly as possible like they would if they were part of a competitive marketplace. As the legislature stands, if ridesharing companies like Uber and Lyft want to operate in B.C., they will simply have to wait for the ICBC. To put an end to such delays, Sutherland is a strong advocate of opening the market up to private insurers.

A number of private insurers offer ridesharing insurance products the provinces of Alberta, Ontario, Quebec and Atlantic Canada, including big names like Aviva Canada, Intact Insurance and Northbridge Insurance. Many insurance firms have expressed keen interest at entering the B.C. marketplace and have products ready to go should the B.C. government choose to end ICBC’s monopoly.

“The current insurance system in B.C. is not working,” Sutherland added. “It’s clear we need another way and we need to get the financial risk of the insurance industry off the backs of the tax payers. The best way we can do that is by transferring that risk to private industry. You don’t have to get rid of the ICBC to solve some of these challenges; you just need choice. If drivers like ICBC, the product they’re getting and the price they’re paying, then they can stay with ICBC, but if they don’t, they could shop around and take their business elsewhere.”

An ICBC spokesman responded to Sutherland’s comments, saying: “This is unsurprising given IBC represents the private insurance industry […] Private insurance companies would have to do the same work as ICBC to develop a viable ride-hailing product that would be in compliance with British Columbia laws and regulations.

“ICBC will work with the provincial government to support the drafting of regulations and will be required to file an application to the BCUC for any resulting changes to the Basic Insurance Tariff, once they’re determined. ICBC will be ready to deliver the blanket insurance certificate that we anticipate will be usage-based, when the various detailed amended regulations are in place and a BCUC filing is approved.

“ICBC will be working with government, the ride-hailing industry, taxis and other stakeholders on detailed requirements to ensure a smooth transition.”