Brokers celebrate major insurer’s penalty for UberX drivers

Brokers are applauding one of the largest auto insurers in Canada for its unprecedented initiative in cracking down on improperly insured UberX drivers

Risk Management News

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Brokers have a new reason to applaud Aviva Canada: the insurer has taken an unprecedented initiative to crack down on underinsured UberX drivers in Ottawa.
 
When the carrier’s fraud center received a tip that four motorists were engaging in ride-sharing activity, it launched an investigation into whether those vehicles-for-hire maintained commercial auto policies. The drivers responded with “a variety of explanations – or lack thereof - from our policyholders as to why they were not properly insured,” according to a company bulletin.
 
Aviva Canada proceeded to cancel two of the driver’s auto coverage, let the third one’s lapse upon renewal and agreed to renew the fourth driver’s policy after she proved that her misrepresentation about the vehicle’s usage was unintentional.
 
“We didn’t proactively go after this, but were specifically asked to investigate,” said Glenn Cooper, senior manager, public relations and social media, Aviva Canada. “But there are risks involved with ride-sharing, such as the increased risk of personal injury, theft and collision, and we wanted to make sure that those risks were adequately shared among all policyholders.”
 
Cooper says that prior to years past when the public discourse was largely critical of insurance companies for not keeping up with “the Ubers of the world,” many Canadians now understand that the industry is just trying to keep their clients from harm.
 
“It’s as if someone walked into a party and said, ‘Hi, I drive around without insurance all the time,” he said. “Most people now know the repercussions of that, and understand that you could be financially ruined for the rest of your life.”
 
Brokers are also celebrating the increased scrutiny placed on ride-sharing services, but emphasize that the four UberX drivers faced a relatively light penalty.
 
“The penalties for lying on a statutory auto application have been beefed up, and while we haven’t seen authorities throw the book at anybody to this extent quite yet, the fines can be up to $250,000 for the first offense and $500,000 with possibility of jail time for the second,” said Philomena Comerford, president and CEO, Baird MacGregor Insurance Brokers LP.
 
Comerford remains apprehensive about the effect that unregulated ride-sharing services could have on the insurance sector.
 
“The exposure being thrust upon personal lines carriers is significant and growing,” she said.
 
She is unsure whether an insurer-driven solution, such as the one recently proposed by Intact, can change that.
 
“None of them will buy it, and then taxi drivers will say, ‘Why should I spend money when I can go and do this and fly under the radar,” she said. “That’s going to interfere with our ability to differentiate risk and put risks in the right bucket, preventing actuaries from doing what actuaries do,” she said.

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