Plan Insurance Blog

TfL urged to delay new Private Hire Rules

TfL have confirmed the date when important regulatory changes will come into force for the private hire industry. The short notice and lack of detail have led to Plan joining representatives from the insurance and private hire industries to call for the deadline to be pushed back. It is felt that more information is required along with further consideration of the potential implications.

Plan normally supports any initiative aimed at removing uninsured drivers from the UK’s roads. However we have contacted the regulator to request clarification on the measures due to concerns regarding their work-ability and the lack of notice.

It was announced in an email sent to private hire drivers and operators on Friday June 17th (but not insurance suppliers or trade service providers) that the majority of the changes would come into effect on Monday 27 June 2016 for new private hire licence applicants and existing licensees have been given until July 11th to comply.

The new regulations cover a numbers of areas including: English language skills, topography knowledge and disable passenger awareness training as well as insurance.

The most significant amendments relating to insurance is that:

  • All private hire vehicles in London must have hire and reward insurance in place both at the point they are licensed and for the entire time the vehicle is licensed – including when the vehicle is not in use as a private hire vehicle.

We have received a high volume of calls from clients who have been concerned by TfL’s communication of this measure. Due to TfL’s failure to engage with the insurance industry we are unsure how to interpret the ruling exactly.

Confusion exists as to whether insurance certificates will need to run concurrently to vehicle licences? We cannot say for definite but we presume this will not be the case as it will cause a huge amount of cost and inconvenience with seemingly not benefit to any party.

Drivers would be forced to cancel policies before accruing a full year’s private hire no claims bonus which could force them to pay as much as 30% more for their insurance. They could be subject to hefty cancellation charges imposed by insurers and if they have claimed on the policy they will not be entitled to any refund.

Other questions include whether temporary cover notes will be accepted by inspection centres? This could be a large stumbling block as it is not possible for insurers to issue full annual certificates to clients at the inception of a policy until all relevant docs have been returned. Also if a driver needs to make an amendment to their policy during the policy period, the cover start date on their documentation will change as soon as the alteration comes into force. So it will no longer tally with the vehicle licence.

Another issue is whether insurance documents that state cover is provided for “private hire insurance” rather than “hire and reward insurance” will be acceptable? TfL have provided no insight as to the standard terminology that they will require. If they do require changes to documentation which is currently acceptable then insurance companies will need to be notified and the appropriate wording provided

A final consideration on this measure is that any fleet operator that wants to remove a vehicle from cover for a short period will be forced to keep it on cover and incur costs that would otherwise have been avoided. No system such as a SORN which is used by the MIB has been provided for fleet operators in these circumstances. This is particularly applicable for operators with multiple school contracts who take vehicles off the road during the holiday period take maintain them or understandably avoid unnecessary costs whilst the vehicle is not in use.

The second regulation that relates to insurance is:

  • Details of their insurance must be carried or displayed in the private hire vehicle at all times while the vehicle is licensed as a private hire vehicle.

The majority of drivers are likely to have proof of their private hire insurance on them at all times in any case. However it would be good to know if physical copies will be required or whether digital documentation stored on a smart phone or tablet device will suffice.

Director Grant Georgiades clarifies Plan’s stance regarding the new regulations,

We actively campaign to remove uninsured taxi and private hire drivers from the road. Hence, our sustained campaign to bring about the Taxi Insurance Checker portal. If this is the goal of TfL’s new measures we’re not confident they will achieve it. There is a difference between insisting that drivers have insurance and being able to enforce the rule.

There are also significant practical obstacles to overcome in regards to the new regulations. The deadline for the measures being introduced has been announced despite assurances that the insurance industry would be consulted prior to doing so. The announcement was made with no warning and contained very little information. It feels likes the finer details have been completely neglected.

Are drivers required to cancel their policies and recommence new ones to coincide with the date of issue of their vehicle licence? If so that will cause a considerable inconvenience and costs. Insurers impose hefty cancellation terms and the insurance sector has been handed very little time to negotiate on drivers’ behalves.

Is TfL effectively calling time on drivers operating on short term policies? At Plan we only offer annual policies and agree with Steve Garelick of the GMB Union’s Drivers Branch that in the long run this should benefit any driver that is committed to the trade long term. However if it is the case we have a large amount of sympathy for drivers that own their own vehicles and operate legally by renewing short term policies. They have been offered no advice as to how they might gain affordable cover that will enable them to continue earning their livelihoods. In the long run taking out an annual policy and paying via monthly direct debit payments may actually be more cost effective, especially if they accrue no claims bonus but they need to have this explained and time to explore their options.

Should drivers be able to apply for a short term vehicle licences at a reduced overall cost but a higher proportion of the annual amount? If TfL are effectively trying to remove all drivers that operate on short term policies there will be wider implications for the PH industry. Operators may struggle to cope with increased seasonal demand in London from now on.

Insurance providers who do specialise in short term (weekly, monthly and quarterly) policies will no doubt be encountering high volumes of enquires from clients faced with significant issues. Unfortunately due to TfL’s poor communication and a lack of warning they will not be armed with the knowledge to help answer their queries.

On Monday July 4th Plan will be joining LPHCA and a selection of trade associations and service partners to collate a full list of issues that require either clarification or amending before being enforced.

The strength of concern has led to the LPHCA calling for the immediate suspension of the implementation of the changes to PHV regulations in London. Chairman Steve Wright MBE is alarmed at the changes,

It is clear there is serious confusion surrounding many of the new requirements and a lot of unanswered questions not only from drivers and operators within the industry but also from PHV insurers, vehicle hirers, accident management companies and others.

It is hoped that TfL TPH will join the meeting and that presenting a collective response rather than piecemeal feedback will garner a prompt and thorough response. We will provide an update as soon as we have further information.