Off the Kuff Rotating Header Image

Insurance Council of Texas

Checking in on Uber and Lyft in San Antonio

San Antonio City Council will soon be taking up with vehicles for hire issue, and so far things have gone about as smoothly as you’d expect.

Lyft

A proposal from City staff to integrate rideshare companies into the existing Vehicle for Hire Ordinance, and therefore legalizing rideshare operations in San Antonio, was met with unanimous opposition from the Transportation Advisory Board (TAB) Monday evening. It seems arguments from all sides of the issue remain unresolved – and just as heated.

The TAB is made up of citizens, representatives from transportation, tourism, and hospitality industries. The board’s vote to reject the proposal that would legalize rideshare was not surprising.

The traditional vehicle for hire (taxi, limo, shuttle, carriage) industry claims that the transportation network companies are unfairly and unsafely circumventing regulation under the guise of mobile technology. The TNC’s, and San Antonio Police Department Assistant Director Steven Baum, claim that regulations need to be changed to accommodate for an evolving industry – including its technology.

Uber

“The (proposed) system’s a little different, the system for the transportation network companies puts responsibility on the companies to vet the drivers (and vehicles) according to city standards,” Baum said. Traditional companies go through a testing and verification process through the City.

“The way we validate (those standards) is we do random, unannounced inspections,” he said, compared to the regularly scheduled inspections granted to traditional vehicles for hire and their drivers. Baum assured TAB members that neither public safety nor the city’s economy would be put at risk.

“I can’t believe you’re shoving this ordinance down our throat,” said TAB member George Alva during one of the most heated exchanges between a board member and Baum. “From the very beginning your mind was made up.”

Three months ago Baum was tasked by the City Council Public Safety Committee to see if there was a way to integrate rideshare into the current ordinance (Chapter 33 of City Code) and present his findings at the committee’s Aug. 6 meeting. From there, the committee can decide if further research is required or if the proposal should proceed to a City Council vote.

See here and here for the background. The Council committee will have both the committee report and the TAB’s rejection of it to take into consideration. Good luck with that, y’all.

On a tangential note, Joshua Sanders, one of the people that has been representing Lyft in Houston, sent me this update to Lyft’s insurance policy. The point of this is that once a ride has been accepted, Lyft’s commercial policy is the primary policy in all instances now. As we know, there have been questions about how insurance works with TNCs like Uber and Lyft, and recent stories have indicated that representatives of Texas’ insurance industry see gaps in the coverage. I would be interested to know what they think about this.

Finally, there’s a provocative op-ed in the Chron from Michael Zoorob, who is an intern working as a research assistant at the Southwest ADA Center, a nonprofit disability organization in Houston. He takes Uber and Lyft to task for their lack of accessibility for disabled folks.

So why can’t the disabled community just use other modes of transportation? For one thing, the rapid entrance of Uber and Lyft – following a pattern of “break the rules and ask questions later” – has eroded the supply of accessible taxis, as seen in some cities. In San Francisco, a quarter of the wheelchair-accessible taxi fleet is unused as taxi drivers have flocked to ride-sharing companies.

For all the complaints about ride-share companies, you’d have a tough time finding a best-practices model among traditional taxi services. In Houston, there are only 50 accessible taxis on the market covering more than 600 square miles. They make up about one-fiftieth of all taxis. So if you use a wheelchair, good luck hailing a cab.

As a society, we have decided that people with disabilities deserve equal opportunity to participate in public life. This logic compelled Congress in 1990 to pass the Americans with Disabilities Act. In his signing remarks, analogizing the ADA with the fall of the Berlin Wall, President George H. W. Bush declared: “We will not accept, we will not excuse, we will not tolerate discrimination in America. … I now lift my pen to sign this Americans with Disabilities Act and say: Let the shameful wall of exclusion finally come tumbling down.”

It is precisely this “shameful wall of exclusion” that Uber, Lyft and other transportation providers seek, however unwittingly, to maintain with their standards of service to the disabled community. And it is wrong.

It is wrong to relegate citizens with disabilities to a separate, segregated system of transportation, just as it is wrong to deny them access to City Hall or to a grocery store because accommodating them is costly. It is a fact of American history that when marginalized groups are allowed access only to segregated services, these services tend to be inferior. This is the reality for many people with disabilities who must rely on state-provided paratransit services.

Uber and Lyft must play by the same rules as everyone else in the taxi marketplace, including providing service to everyone – a standard that also bears improving among taxi companies. Being innovative does not excuse trampling on the rights of people with disabilities.

As Zoorob notes, there was a lawsuit filed recently against Uber and Lyft by disability rights activists. I’ve said before that I’m not sure how their business model, which relies on the personal vehicles of their drivers, can handle making these accommodations. Zoorob makes a compelling case that they need to figure it out, or else.

UPDATE: Meanwhile, the Chron opines again in favor of Uber and Lyft, while CM Stephen Costello and Texpatriate’s Noah Horwitz, who is working for Cindy Clifford’s firm, have dueling op-eds in TribTalk about it.

Will we finally get a vote on vehicles for hire this week?

Remember last month when Council was supposed to vote on a vehicles for hire ordinance change to allow Uber and Lyft to operate here in some fashion? It was put off till July 30 to allow for some form of “consensus” to emerge among the stakeholders. How’s that going? Slowly, it would seem.

Lyft

At least 2 percent of vehicles for hire in Houston would be capable of serving disabled passengers who require special treatment under revised rules proposed by city officials.

The changes, part of the debate about new companies barging into the Houston paid ride market, would meet what officials said is the anticipated demand for cabs and other vehicles in Houston by those who are in a wheelchair or who require a lift to get into a car.

Far more than 2 percent of Houston cabs and limousines are accessible to disabled passengers now.

Service to the disabled was one of the chief concerns expressed by City Council members as they debated regulatory changes that would open the local market to new companies such as Lyft and Uber. The companies pair drivers using their own vehicles with customers interested in hitching a ride. Lyft and Uber use smartphone applications to pair drivers and riders, then take a cut of what the rider pays.

[…]

Uber

Other than the provisions for the disabled, little of the 140-page Chapter 46 of the city code changed since council members delayed a decision last month. Beyond the 2 percent standard, the regulations would require city officials to periodically gauge the demand and progress of disabled for-hire vehicle availability.

Yellow Cab alone already meets the 2 percent threshold for the entire city, in part because the agency is a provider of disabled rides for the Metropolitan Transit Authority, which pays for rides for some clients. According to a 2013 study, Yellow Cab has more than 200 vehicles compliant with the Americans With Disabilities Act and equipped with wheelchair lifts.

Currently the city has fewer than 2,500 taxi permits and fewer than 1,900 limo permits issued. It would take more than 5,000 new vehicles entering the paid ride business before the industry would risk having too few vehicles to meet the 2 percent standard.

You’d think we could have arrived at this point in less than 45 days, but whatever. Cab companies were reviewing the revised rules as of last report. I’m going to step out on a limb here and guess that they still won’t be happy about them. On the one hand, it’s not clear to me that just because there will be an increase in the total number of vehicles for hire in Houston that there will also be an increase in demand for rides by folks that need vehicles that are accessible to the disabled. But that doesn’t mean that the newcomers shouldn’t need to carry some of that load as well. How you ensure that Uber and Lyft have some number of cars that can give rides to people with disabilities is still an open question. You could require them to have a certain number of such vehicles available and make their app have an option to request one, which means in effect that they’d be operating like traditional cab companies in this respect. Or I suppose you could require them to have some number of drivers who own such vehicles among their troupe of available drivers for at least some set number of hours per day. I have no idea if that could work.

Perhaps it would be useful to see how other cities are handling this issue. The city of Minneapolis just voted to allow Uber and Lyft to operate. The question of rides for folks with disabilities came up there as well.

The new ordinance distinguishes the companies from taxicabs, creates a process for them to become licensed and specifies what insurance they must carry. Insurance is a particularly complicated issue for the services, since they typically use hybrid plans that complement a driver’s personal policy.

But taxi industry representatives weren’t happy with a two-tier fee structure that will charge major taxi companies significantly more than transportation network companies. Others have concerns that changes to the wheelchair-accessible vehicle requirements could backfire.

Minneapolis follows California, Colorado, Seattle, Chicago and Baton Rouge in passing legislation to specifically regulate the services; St. Paul is crafting its own version, while other cities have interim agreements.

[…]

Another point of contention related to how a proposed incentive program for wheelchair-accessible vehicles will work. The city will fund it using a $10,000 surcharge, which replaces an existing requirement on companies to provide the vehicles themselves (which never acheived compliance).

“I dont think there’s a taxicab company that will do it,” said Waleed Sonbol, owner of Blue and White Taxi, following the vote. That concern that no one will bid on the program was reflected in a letter earlier this week from disability advocates.

[Ordinance sponsor Jacob] Frey said the new system will actually work better, however. “If you’re an individual with disabilities and you need transportation, you call one number and you will get service that is fully ADA accessible,” Frey said. “And we aready have four or five different companies that are chomping at the bit” to provide that service.

Council Member Cam Gordon, who expressed concerns Thursday with the disability provisions, said the entire process convinced him that the Twin Cities should be tackling transportation regulations as a region.

“This whole process has only reaffirmed for me my conclusion that having the city regulate this industry is no longer necessarily appropriate,” Gordon said.

Cabs got several breaks in the new law. New regulations spearheaded by council member Abdi Warsame allow non-city facilities to inspect vehicles, extends the maximum age of vehicles by five years and gives drivers more parking privileges.

“What we have in front of you is the wish list of the taxi companies,” Warsame said.

Some possibilities there for Houston, perhaps. I certainly hope someone has at least placed a call to the cities with existing ordinances to see how they handled some of the concerns that have arisen.

There’s also the insurance question.

It’s a transportation company that’s growing at record speeds, but some are saying slow down and put on the brakes because when it comes to insurance coverage you may not be safe.

“It does concern us,” said Mark Hanna with the Insurance Council of Texas as he spoke of Uber. “We have 20 different states looking at this and no one really has come up with a solution.”

Uber connects a passenger to a driver via an app on a cell phone. That’s the only way the driver and passenger are supposed to communicate. All fare transactions go through a credit card already on file.

But rivals of Uber, such as local cab companies, say that isn’t always happening and that can put everyone in danger. And that has the insurance industry concerned.

“You’ve got gaps,” said Hanna. “In fact, there may not be any insurance coverage whatsoever.”

According to Uber, unless you go through the app and abide by Uber’s platform, Uber’s insurance policy does not apply.

And according to Hanna most personal insurance policies don’t cover drivers if they charge a fare. And that could leave people exposed.

[…]

And it’s concerns like that that have the Texas insurance industry asking Uber to put on the brakes.

“We’re just asking them to slow down,” said Hanna, “Let us put some mechanism in place that lets us provide coverage for everybody, so everybody is safe.”

Uber declined and on-camera interview, but in a written statement said if a driver is accepting trips through other means that the Uber platform, Uber’s insurance policy does not apply.

Here’s another story about how the insurers in Texas are saying that there’s a gap.

Mark Hanna, a spokesman for the industry group the Insurance Council of Texas, said insurance companies across the U.S. are looking to state regulators and legislatures for guidance as they prepare to offer expanded policies.

“Everyone is trying to come up with a solution,” Hanna said.

California might be the place where model legislation or regulation will be crafted.

Pete Moraga, spokesman for the Insurance Information Network of California, said lawmakers in the California Assembly and state Senate are working on bills, and state insurance regulators are pondering new regulations.

In Texas, insurance regulators haven’t made much progress in dealing with ride-sharing companies.

Texas Department of Insurance spokesman Jerry Hagins said that state law requires auto liability coverage, but it doesn’t distinguish between personal and commercial coverage, and local municipalities must set requirements for insurance for taxis and livery operations.

So far, Austin city officials have deemed Lyft and Uber to be operating as illegal and unpermitted taxis. Officials have gone so far as to impound vehicles and ticket drivers.

Hagins also said that most insurers offering personal auto policies do not rate their policies for commercial uses.

Patti Kelly, a State Farm spokeswoman, confirmed that Uber and Lyft drivers in Texas generally wouldn’t be covered by their personal policies while earning extra money shuttling people around.

Both Uber and Lyft have liability policies that insure drivers who take on passengers under their name. But they are supposed to pick up where personal polices leave off, the companies have said.

Advice from the Texas Department of Insurance echoed the guidance from the Insurance Information Institute: Call your insurance company to confirm you’re covered.

Again, you’d think some progress would have been made on this by now. At the very least, can we get a definitive answer on whether those Uber and Lyft liability policies do in fact pick up where the personal policies leave off? Perhaps the Legislature needs to get involved here.

In any event, that’s the lay of the land as Council prepares to maybe vote on this on Wednesday. Assuming it doesn’t get tagged for a week – I’m not sure if that’s still in play after the current delay – or any further delays are proposed.