Sometimes the floodgates to change are officially opened in the strangest places.
For the future of the ride share/taxi/car hire business in Australia, the place is Canberra.
A month ago, the Insurance Council of Australia was effectively warning people off Uber.
Today, it’s welcoming the taxi industry’s biggest threat into its business fold.
Yes, of course insurance companies will be happy to take money from the disruptors.
The Australian Capital Territory government’s decision to offer UberX a fully legitimate existence and the ICA’s decision to go along with it, foreshadowing the creation of suitable insurance products, should prove the beginning of the end of the taxi industry’s battle against the alternative service.
Once Uber can point to the ACT as an example of the world not coming to an end through allowing consumers to choose the type of ride they want, it will be increasingly hard for state governments to continue to protect the taxi monster they helped create.
The states are guilty of helping the dominant players in the taxi plate game build a warped and artificial market in the government licences that are taxi plates.
The result has been rent seeking at the expense of consumers and drivers and vastly inflated plates.
The taxi industry’s first line of defence against the arrival of UberX has been claims of “safety”.
Turns out many consumers feel much safer with an Uber driver than in a taxi, as I’ve written in another place with reader’s comments confirming that opinion.
The fall-back position from there has been questioning insurance coverage for both drivers and passengers – a grey area that hasn’t been adequately covered by Uber management and made worse by the ICA’s attitude. Until now.
For the record, here’s what the ICA put out today:
The Insurance Council of Australia (ICA) has welcomed the ACT Government’s decision to legalise ride-hail services (also known as ridesharing) from the end of October.
The decision will provide certainty for ride-hail drivers and passengers in the ACT, and allow insurers to respond with appropriate products to cover the emerging transport market.
ICA CEO Rob Whelan said the ACT Government’s proposed regulatory regime included many of the features the ICA has been advocating for some time.
“The introduction of a separate compulsory third party insurance (CTP) category for ride-hail drivers will reflect the higher risk they are likely to represent due to spending on average more time on the road,” he said.
“It also means that, like taxi and hire car drivers, their higher CTP premiums will deliver adequate funds to meet claims without forcing private motorists to subsidise their costs.
“The ICA recommended this course of action in its submission to the ACT Taxi Innovation Review in June, and we’re pleased it is being introduced.”
Though ride-hailing will soon be legal in the nation’s capital, the ICA warns drivers that their comprehensive motor insurance policies will not automatically cover them for the commercial use of their cars.
It also reminds drivers that ride-hail services in other states and territories remain illegal, with regulators in several jurisdictions cracking down on ride-hail drivers.
“If you are already providing a ride-hail service in the ACT, or are considering signing up as a driver, you should check with your insurer to see if you are covered,” Mr Whelan said.
“Though some motor vehicle policies may cover these services under strict conditions, most policies exclude the use of a private vehicle for taxi or car-hire style services.
“ACT ride-hail drivers will need to contact their insurance company to find out if their policy is appropriate.
“You can be certain insurers will swiftly respond to market forces by developing products that suit ride-hail drivers, and protect both them and their passengers.”
With the New South Wales Government Point to Point Transport Taskforce now considering its regulatory response to the boom in ride-hail services, the ICA is again calling on other states and territories to review and clarify the legal status of the services.
Some nice fence-sitting there by the ICA, wanting to run with the Uber and hunt with the incumbents, but there’s a sense of inevitability about the will of consumers winning out over the vested interests of taxi plate owners.
Given appropriate safeguards and balances, Uber and its peers should eventually find a balance with the taxi service – unless the sorry history of state governments being run by taxi heavyweights continues.