Motor insurance hikes might cripple the Irish taxi industry

The price increases have already forced some operators out of business.

By Noel Ebbs CEO, Lynk

TAXI DRIVERS ARE experiencing real hardship as a result of the increase in motor insurance premiums, with a lot of drivers seeing their insurance premiums almost doubling – even those with full no-claims bonuses intact.

The result of this is that quite a number of taxi drivers have been forced out of business, however those hanging on are under real pressure and have to work incredibly long hours to cover the increased premiums and maintain any decent quality of life.

These are people who have mortgages to pay, families to support and have now been burdened with another cost on their income, one that is not being justified to them.

In a time where workers in other industries are starting to feel the benefits of an economic upturn, taxi drivers are working longer hours than ever to meet the unfair increase in insurance costs.

Taxi companies are also feeling the negative impact of the insurance increase for their drivers. This development has impacted the morale of the industry as a whole and is casting doubt over job security for people interested in joining the industry.

Drivers who can’t sustain a living or are retiring are not being replaced as many potential drivers are not seeing the industry as a viable place to make a living. Over 1000 cars have left the industry over the past two years, the idea of them being replaced now seems more unlikely than ever.

The reduction in taxi numbers means the taxi industry is feeling immense pressure to meet customer demand at peak times. Customers are starting to feel the effects of this and, although we are doing everything we can to maintain the best possible service, if there aren’t enough drivers to cover calls then industry quality will start to slip.

If this continues, the industry will stagnate and the quality of taxis in Ireland will rapidly drop. Putting any kind of industry under these constraints would only yield negative results. If the trend continues, we will have a serious lack of taxis in Dublin, which will have a huge effect on customers and industry standards.

22/1/2014. Rows of Taxis Cabs
Source: Sam Boal/RollingNews.ie

An unfair system

Insurance companies are claiming that premiums are rising because of higher claims payouts. However, figures recently released show that insurance claims have in fact fallen dramatically between 2011 and 2014.

There is currently no visibility regarding how insurance companies calculate profits or losses or decide on a premium increase. Their approach seems to be ‘whatever the market can bear’.

This is not only an unfair system, it is also very under-regulated – the fact that premiums have increased by so much and yet we’re being given such loose reasons for this is unacceptable.

Another revelation of this unfortunate issue is that some insurance companies are now looking for a minimum of two years’ taxi experience with no claims for new quotes. This means new entrants to the business have to have two years taxi experience with no claims! Contradictory and impossible, of course.

This requirement has to be removed and replaced with two years’ commercial driving experience, or three years’ private driving experience with no claims to make entering the taxi industry a valid option.

There should be an element of price control for such a compulsory purchase. All motorists are required to pay insurance on their vehicles – and as an essential payment, we need valid reasons when abruptly receiving much higher premiums than ever before.

In order to achieve this, regulators need complete access and visibility of insurance companies’ trading accounts in order to assess premium income profitability and ensure that it is calculated fairly for drivers.

The Injuries Board needs more power to assess and award claims. In the long run, claims for specific injuries should be standardised and, over time, harmonised internationally.

We need payouts to be controlled to build towards steady fair premiums for drivers in a more structured insurance industry that must appease to strict regulations to control erratic insurance premiums.

Noel Ebbs is the CEO of taxi-app company Lynk.

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