Plan Insurance Blog

Uber’s Flawed Compliance Plan for TfL

Following UBER’s announcement that they wish to mandate which insurers and brokers insurance can be purchased from by drivers using their platform, our Head of Innovation Daniel Severin has been in discussions with the GMB Union. He has provided the open letter below to Steve Garelick, GMB Regional Organiser Logistics, Gig Economy & Local Government.

In the letter Daniel outlines his thoughts and a number of concerns regarding the app firm’s proposals. It’s important that we stress that the proposed rules are not due to come into force until December 1st 2021 and there is currently no need to take action or to be alarmed at this stage. The below contents may be shared in the hope that can help inform any affected parties requiring information. Please feel free to forward the information to any alternative Union, Association or related party that you feel may benefit from reading it

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Plan’s Open Letter to GMB Union Regarding UBER Insurance Proposals

Hi Steve,

I have looked at UBER’s proposals and broken down my analysis into three sections: Issues UBER may face, Issues drivers may face and lastly alternative solutions. From our conversations, I now understand from you that UBER have been asked by TFL to demonstrate how it will safeguard against uninsured drivers using its platform.

They have, therefore, developed a system called ‘Instadoc’ on which they have partnered with 8 insurance providers. I believe these suppliers will have links and API’s (Application Programming Interfaces, over which two applications may talk to each other) that will allow UBER to check to see if a driver’s insurance policy is valid.

Presumably UBER believe this functionality will demonstrate to TFL that they are fulfilling their role as a responsible operator and ensuring their drivers are insured at all times.

However, by choosing to proceed using this methodology I can see a number of issues arising.

Issues UBER May Face

The first objection that UBER may face is likely to be from insurers/suppliers who are not on their approved list. The following are some very crude estimates and I am sure you are better placed to know the precise numbers. However, I am led to believe that there are currently circa 78K Private Hire Vehicles (PHVs) licenced by TFL and various reports suggest UBER have circa 45K Private Hire Drivers (PHDs) on their platform.

Therefore, roughly speaking UBER have almost 60% of all TFL drivers on their platform. Also, let us not forget that these numbers have drastically reduced due to COVID, and many predict we will start to see a rise again as there are still over 100K drivers with a private hire licence.

So, by enforcing drivers to buy insurance from their approved list, Uber will effectively reduce the available market for insurers not on the list by circa 60%! Insurers not on the list are unlikely to take that result lightly! How would you act if your business was about to lose 60% of the market it operates in, due to a closed marketplace you are not being allowed into?

Therefore the insurers not on the list have already started discussions with:

  • The Association of British Insurers (ABI)
  • The British Insurers Brokers Association (BIBA)
  • The Financial Conduct Authority (FCA)
  • The Prudential Regulation Authority (PRA)
  • The Competition and Markets Authority (CMA)
  • The Motor Insurers’ Bureau (MIB)

From my sources insurers are speaking to the regulators to understand if this amounts to a non-authorised body influencing a purchasing decision. They have specifically asked the CMA whether this initiative will create creating an unfair and closed market amongst insurers.

They are also objecting to the proposal on the following grounds:

  • UBER will be directly driving business away from brokers and into a non-advised channel. Meaning little to no protection to the consumer. This contradicts the FCAs stance on consumer protection
  • UBER will be limiting choice and influencing purchasing decisions, which could mean drivers are forced to pay higher premiums. This may be a concern to the CMA?
  • As far as it is known, UBER does not have appropriate authorisation to influence driver’s insurance decision. This may be a concern to the FCA and PRA?
  • They are only providing access to limited capacity all of which are unrated insurers, forcing drivers to buy unrated insurance products.

As a result, UBER may be on the end of a backlash from the insurance industry if they continue with their plans and it might not all be smooth sailing.

The news is already filtering through to the insurance press.

Issues Drivers May Face

My next area of concern are the issues that the proposal may cause for drivers. I understand from our conversation that the GMB already have drivers saying that the insurers on the UBER list will:

  • Not insurer them
  • Will not cover their wife, son or daughter
  • They are all at least 25% more expensive than their current supplier

We are still months away from the deadline day imposed by UBER and we are already seeing these issues. I envisage many more issues arising should the approved insurers:

  • Decline to insure certain postcodes
  • Decline to insure certain cars – due to modifications or values
  • Decline to insure people with a particular motoring offence(s)
  • Decline to insure people with a particular number of accidents and/or claims.

This list could be very extensive and is one of the reasons that in the UK we have many insurers who provide cover to private hire and taxi vehicles/drivers. As result this could impact UBER as they may find some of the drivers can’t be insured and are forced off of their platform.

Alternative Solutions

As previously discussed, we believe the reason UBER intend to introduce “Instadoc” is that TFL are asking large Private Hire Operators to safeguard against the risk of uninsured drivers.

Alternative solutions to what UBER are proposing do exist. They include:

  1. TFL could revisit our proposal for a Taxi Insurance Checker (TIC)

You will be fully aware of the details of this initiative as you sat in on our meetings with TfL on the subject over 5 years ago. It suggested that TfL run automated searches against the Motor Insurance Database to check that drivers licensed for taxi and private hire have the appropriate cover in place. An information pack can still be found on our website at the following pages:

Joining Forces: National Taxi Association Endorse TIC
Taxi Insurance Checker (TIC) Online Portal Information Pack

  1. TFL could link to the MID and MIB.

We know the MID and MIB are very selective on who they allow to access their data and they are not keen on letting Private Hire Operators access and view their databases.

Therefore, TFL could ask all operators to submit a list of their drivers via an API. TFL could then engage with the MID and MIB to view if a driver is insured then feed this back to the operator.

This could all be done electronically and seamlessly and done several times a day to prevent uninsured drivers carrying out private hire journeys.

  1. TFL could reconsider Motor Contingent Liability

This is a slight bone-of-contention for us. A few years ago we were approached by a Private Hire Operator to provide an insurance solution which would cover them in the event that a driver was uninsured.

We arranged a public liability policy for them which had a ‘Motor Contingent’ extension added to it.

Which read along the lines of:

Contingent Motor Policy Endorsement:

This policy can only be enforceable if:
a) There is no other insurance policy enforce to meet any third party claims
b) The Motor Insurance Bureau (MIB) refuse to make any payment in full or part thereof towards any claimant
c) There have been no unlawful active carried out by any claiming third party
d) There has been no coercion or cooperation with the vehicle owner and/or driver of the vehicle to present a claim.

However, we were informed by this particular operator that TFL declined to accept this as proof of a safeguard as they did not deem it to be an actual motor policy. This policy provided £10m public liability coverage and TFL wanted the policy to provide the same limits of cover found on a motor policy. I.e. Unlimited cover for third parties bodily damages.

  1. Contingent Motor Policy

The last and not surprisingly the most expensive option is asking operators to buy an actual Contingent Motor policy (as opposed to Contingent Liability policy with a motor extension.)

As noted above we have been working with an operator to help find a solution to safeguard against uninsured drivers. Therefore, after approaching 106 (yes 106!) different insurers, MGAs, Capacity suppliers etc. we have found two insurers who will provide them with a motor contingent policy.

The reason it is quite costly is due to the fact there is no market information or previous claims performance to base a price against, as no one has provided this type of policy before in the UK. Therefore, year 1 will be rather expensive for the operator but providing no claims are made and the operator continues to work on ensuring drivers are insured, they should see a 20% refund on their payments and heavy reductions on future premiums.

I hope this letter explains the potential issues and concerns regarding UBER’s intention to introduce their “Instadoc” system. I’ve also attempted to provide clarity regarding some alternative solutions that might aid further discussions. As always I am happy to help in any way that I can and to take part in any meetings that may be occurring.

I look forward to hearing back from you in due course.

Yours Sincerely,

Daniel Severin
Head of Business Development & Innovation
Plan Insurance Brokers

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