Taxi companies brace for rough ride on insurance rates

Taxi companies and their drivers in the province are bracing for a second big increase in insurance premiums in as many years.

At least one St. John's business says it's been notified that an application for a 50 per cent increase in insurance premiums is before the Public Utilities Board.

That would be on top of a similar 50 per cent increase approved by the PUB last year.

Up until then, there had not been an increase in liability rates since the mid-1990s.

Still, cab companies say the double-whammy in back to back years is too much to bear.

"It's understandable ... that things go up and things have to change," said Doug McCarthy, general manager of Co-Op Taxi and a member of the St. John's Taxi Committee. "But it's got to stop some place. At this rate, they're going to drive taxis out of business."

Premiums collected from taxi companies help fund what's known as Facility Association, a non-profit organization made up of automobile insurance companies in all provinces except B.C., Saskatchewan, Manitoba and Quebec.

'"It's understandable ... that things go up and things have to change. But it's got to stop some place. At this rate, they're going to drive taxis out of business."- Doug McCarthy, Co-Op Taxi

Historically, Facility has been the last resort for licensed, high-risk drivers turned away by insurance companies in the "voluntary market."

But that also means its rates are far more expensive than the mainstream market.

McCarthy says he understands rates are set to cover Facility's expenses, which begs the question why they want such a large increase now.

"Because in talking to other companies, they haven't seen an overall increase in the amount of accidents that are occurring where taxis are at fault," he said. "I know with our company, we haven't had an at-fault accident in at least two years, if not three."

Not about old vehicles

McCarthy also dismissed the idea that older vehicles are creating greater risk and liabilities.

"Most of the taxis out there are all well within the 10-year life cycle. Most cars on the road now are 2006, 2007 to 2009. And we have several 2013s and 2012s. So it's not the age of the fleet. So, why the second increase in two years? I don't know."

But he and others in the business what to find out.

Cab companies have until May 30 to make their case before the PUB. And they've called a general meeting for next week to discuss the best way to do that.

"I know we can go before the PUB, but how is the best way to proceed?" said McCarthy. "Do we proceed as individuals, do we proceed as individual companies?"

He says the proposed 50 per cent increase this year would mean an average increase of about $1,400 a year for insurance on one cab. And that's before maintenance, gas, and taxi stand rent. He also estimates the bigger companies will see overall premiums increase by about $150,000.

"For anybody to have to absorb another increase like that, it's going to have a drastic impact on the business."

Fare increase?

McCarthy wouldn't say if it will translate into an increase in fares, which went up by 15 per cent in St. John's two years ago.

"We ate the insurance increase last year. We didn't apply for a rate increase to the city or anything else. We just said it's the cost of doing business, we'll suck it up and we'll keep motoring along. But to turn around and have another 50 per cent imposed on us again this year, it's just too much."

Next week's meeting is set for 7:30 Monday night at the Royal Canadian Legion on The Boulevard in St. John's.

McCarthy says every taxi company or driver in the region is invited to attend.

"This proposed rate increase is just something that we can't let slide by without doing something to try and prevent it," he said.

If approved, the 50 per cent increase in rates would take effect Aug. 1.