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Lack of insurance keeping hundreds of taxis parked in the GTA

Last Updated Mar 4, 2020 at 6:57 pm EST

Hundreds of taxis across the Greater Toronto Area are currently parked and suspended from operating as the industry says it’s faced with a massive hurdle that could potentially lead to job losses and fewer vehicles out on the roads.

Taxis are required to have 24-hour commercial insurance, but those in the industry say more and more companies are opting to no longer offer this service due to the “high risk” nature of the business, leaving hundreds of taxis uninsured.

Of the more than 5,000 taxicabs licensed in the City of Toronto, 464 of them are currently suspended from operating because they haven’t submitted updated insurance certificates.

Industry insiders say another 1,000 could potentially find themselves in that position later this month and another 800 in September.

That is according to a taxi fleet operator Sam Moini, who currently has 23 vehicles parked for the first time in 30 years since February 16.

“We don’t want these cars parked. These are people’s lives, families that are at risk here,” says Moini, who runs HPM Taxis. “With the unbalanced rules in the City of Toronto when it comes to ride sharing and taxis, it makes it very difficult for taxi drivers to be able to afford the insurance that is unattainable.”

Moini, who is also the president of the Toronto Taxi Fleet Operators Association, says that the suspension of his vehicles have led to 60 full-time and part-time drivers without work, and he’s still footing the bill in operating his business.

Efrem Fsahaye, a Beck cab driver for over 20 years, was among the hundreds in Toronto who was forced to park his vehicle, missing a whole week’s pay.

“I couldn’t work because my insurance expired, so if I don’t have insurance, I’m not allowed to work,” Fsahaye says. “This is a problem for a lot of taxi drivers.”

CityNews first met Fsahaye last week, when he was inside a packed insurance brokerage firm in the city. He was seated alongside a dozen other drivers in the waiting room, all desperately in search for private insurance.

This week, Fsahaye, was told he was approved for coverage until September. But, the father of four is speaking out because he feels cabbies need a voice and many of them are on the brink of losing their jobs.

“They have no choice, what are they going to do,” Fsahaye says. “I got it, but the feeling is still there. I pray that my colleagues have that same chance.”

What would have taken Fsahaye mere minutes to apply and get approved for in previous years, took more than one week this time.

These cab drivers do have one last option for getting insured called facility insurance. However, Moini says it’ll cost them nearly double the price a private insurance company would charge.

Facility insurance is usually a last resort for many drivers, often described as “a recipe of going out of business.”

Moini says he was quoted over $15,000 per vehicle and $1,500 cancellation fee.

“It’s unaffordable, it’s unattainable,” Moini said. “If I did take the facility insurance, I would be doing it at a huge financial risk to myself and my business.”

Industry-wide problem

Drivers in the city, including taxis, limos and vehicles-for-hire, are required to be licensed in order to operate.

In responding to these insurance concerns, the city maintains that it does not have control over insurance rates and taxis should contact either Insurance Bureau of Canada (IBC) or the Financial Services Commission of Ontario.

However both these regulators, in their response to CityNews, maintain that there are enough insurers in the province.

“There are currently 23 insurance companies licensed to provide commercial fleet automobile insurance,” says Brian Jantzi, a spokesperson with Financial Services Regulatory Authority (FSRA). “Not all 23 companies choose to offer auto insurance to taxis and the actual number fluctuates over time with market conditions.”

IBC tells CityNews it has heard concerns from taxi operators, but the data suggests that 95 per cent of taxis are insured by private companies, while the remaining five per cent are covered by the facility association.

“This could be a situation that is developing more but right now it looks like there’s availability within,” says Pete Karageorgos, director of consumer and industry relations at IBC. “I understand it could be a bit of a challenge for people to do the shopping around sometimes.”

When asked if there are a lack of options for taxis who need insurance, Karageorgos says he doesn’t believe there is. He said there are different ways taxis, like most other vehicles, can be underwritten. One of the ways is in a fleet base.

Most of the taxis in Toronto would most likely insure the vehicles under a fleet policy, which comes with benefits, including getting better rates.

“It’s when you have one of [these] situations that is challenging because you may not get the benefits of being with a group, it’s like group insurance versus individual insurance,” Karageorgos says. “That’s perhaps the situation many people experience if they’re not part of a fleet management company — like the labels that we see driving in the streets of Toronto.”

On Wednesday, the president of the Canadian Taxi Association (CTA) reached out to CityNews, calling the government’s response “absolutely inaccurate, false and misleading,” also adding that there are only two insurance companies that provide coverage to taxis.

“Jantzi and Karageorgos are both providing information which could possibly be true in the best case scenario, but which is definitely not true or accurate in Ontario in 2020.,” says Marc André Way, the president of CTA.

Kristine Hubbard, operations manager for Beck Taxi in Toronto, echoes Moini’s concerns. While the company itself doesn’t insure the taxis working under the Beck Taxi umbrella — it is up to the individual drivers — Hubbard says they see the problem is escalating day by day.

“There is a bit of a crisis in the industry, and it’s just never been addressed,” Hubbard says. “There are a lack of options in terms of available insurance. It puts an undue stress and unfair disadvantage on taxi operators because, for example, Uber and Lyft drivers aren’t required to carry the same kind of insurance.”

Hubbard confirms to CityNews, that another round of taxi drivers will see their insurance expiring in the coming weeks, resulting in an increase of suspended vehicles in the city. She also echoes Moini’s sentiments that quick action is needed to respond to this problem.

“This is not only a Toronto problem,” Moini says. “It’s a Hamilton problem, a Mississauga problem. It’s all over the province.”

In Mississauga, 119 plates are currently parked, though the city can’t specifically identify how many of these drivers are suspended due to reasons relating to insurance.

A spokesperson adds that they are “anecdotally aware” of the significant shifts in the insurance industry. In Hamilton, there are 105 taxi plates that are parked or between brokers.

While taxis are required to have 24-hour commercial insurance, ride-sharing companies are covered the moment the app is turned on, through two insurance policies offered in the province.

“When the app is turned off, the vehicle owner’s personal auto insurance policy applies,” FSRA says.

Moini wants this same hybrid option made available to cab drivers too, saying that these insurance issues are creating further instability in the industry.

“Whether it be through changing some kind of legislation to make it more attractive for insurance companies to work with the taxi industry or giving us hybrid options such as ride-sharing vehicles have today,” Moini says. “Is it a good insurance policy? I don’t know, but we’re looking forward to working with the province and hoping the Insurance Bureau of Canada and insurance companies will speak with us directly.”

Baird MacGregor Insurance Brokers LP insures 3,000 taxis in the province. The company’s president, Philomena Comerford, says four insurers have withdrawn their services to the taxi industry in the last few years, creating a big gap in the market, leaving only two remaining for cabbies.

“As a result of that, there’s a massive dislocation that has taken place because of these withdrawals and everyone is scrambling,” Comerford says.

Comerford says by mid-February about 1,500 taxi drivers needed to renew their insurance and by the end of March, there could be more than 3,000 taxis looking for coverage.

“We can only absorb a certain amount that fit within a prescribed criteria because our insurer isn’t in a position to pick up that much business,” Comerford says. “We certainly can’t cure the problem.”

High-risk business

A number of taxis who spoke with CityNews were most recently covered through RSA Insurance Group — a company that according to these drivers recently stopped offering this service to cabbies because it’s “high risk.”

Attempts to reach out to the company were made last week, but a spokesperson didn’t respond to questions regarding claims made that the company recently discontinued insurance services to taxi drivers.

“We work closely with our broker partners to ensure there is appropriate notice and opportunity for customers to seek alternative insurance options when we are not able to provide coverage,” says Sybil Eastman, communications manager at RSA.

Comerford also confirms to CityNews that RSA recently stopped issuing insurance coverage to taxis, adding that it’s a high-risk business that doesn’t offer much incentive to companies like RSA.

In the last few years, Comerford says she has been working on a reform that she presented to the government regulators and that may be able to address some of these issues. The proposal is to change an existing regulation that would allow no fault accident benefit injury claims to transfer to the at-fault vehicle.

Comerford explains that taxi owners pay a heavy price for claims where they’re not at fault, because they carry a lot of passengers, many of which don’t have their own insurance.

“That burden is carried on the taxi driver’s shoulders, so the price of their insurance reflects the heavy burden of the auto policy,” she explains. “They also provide probably 75 per cent of the accessible services through the TTC contract, so they have people who get injured that have complex medical profiles. If something happens to somebody that already has compromised health, they can be quite expensive.”

Comerford says her experts have confirmed that changing this existing rule will take the claim cost down by 25 per cent, reducing the risks to insurance companies, who would then have more incentive to once again offer these services to the auto-industries.

“They would relax a little bit, if you can show them why the profiles would improve,” Comerford says. “We think the situation is one that is a five-alarm fire and we hope that the government will do something to ease the pain, and help us as brokers and intermediaries have conversations so that we can advocate for this industry group which has absolutely been drop-kicked.”

Changing face of the industry

It’s no secret the taxi and ride-sharing industries have had a rocky relationship. Cabbies have oftentimes felt that provincial and municipal laws and bylaws were more stringent on their drivers, while the rules were less restrictive on ride-sharing companies.

In the last few years, while thousands of taxi drivers in the GTA left the industry, ride-sharing companies have more than doubled in some cities.