This week, Aviva Canada took a stand against ride-sharing services by canceling the personal auto coverage of two policyholders who were identified as UberX drivers in Ottawa.
Brokers have applauded that move, and believe that now is the time for the rest of the industry to join in the crusade to regulate Uber.
“Predictions are becoming realities,” said Philomena Comerford, president and CEO, Baird MacGregor Insurance Brokers LP, during a CIP Society webinar on the sharing economy. While she celebrates Aviva Canada’s “bold step of canceling policies,” she emphasizes that the UberX drivers walked away relatively unscathed, given that they had technically engaged in insurance fraud.
“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,” she said.
Comerford believes that the city of Toronto is especially in the spotlight, as its response to UberX will likely have a domino effect on other provinces in the country. She encourages brokers to speak out against the app, as an UberX-filled market could expose them to a host of new liabilities otherwise.
“From a broker standpoint, we have a responsibility to inform our customers about risk,” she said. “This presents a very significant E&O exposure from coast to coast that is new for us. Every time there’s a regulatory change, we have to explain it to customers. This is another one we’ll have to add to the list.”
Underwriters may struggle as well, since they will have no way to verify that applicants who deny that they plan to use their vehicles as a “ride-for-hire” on an auto application will follow through with that intent. Comerford says that the last time she placed a taxi account, “40 people weighed in on it after actuaries did the workup,” and she had to receive approval from the C-Suite.
“Technology doesn’t trump the law, and our underwriting of taxis shouldn’t change because we’re using an app to dispatch people, as opposed to dispatching them in ways that we’re most familiar with,” she said.
Moreover, she worries that an UberX driver’s carrier may offer $200,000 in absolute liability for a claim, only to demand it back when it’s discovered that the client was excluded because of how the vehicle was being used.
“Everyone is hypnotized by new technology, while insurance is boring and no one wants to talk about it,” Comerford said. “But it’s only boring until it doesn’t work, and then everyone wants to talk about it.”
