The great Taxi Insurance Rip-off

The cost of taxi insurance differs from state to state and dramatically. In Queensland for example compulsory third part injury (CTP) will set an operator back $6,100, in NSW $5,000 and in Victoria only $2,000. Does this mean that Queensland taxi drivers are three times more likely to kill or injure someone than their counterparts down south? Of course not. Their operators are simply being ripped off..

by Tim Hoi

The difference in taxi insurance premiums between states is an absolute outrage. Operators are fleeced by the insurers and some in turn screw their drivers while the regulators of the industry turn a blind eye.

I have already mentioned the astonishing and inexplicable differences in CTP insurance, but such differences apply across the complete spectrum of taxi insurance.

Comprehensive insurance in Sydney for a 2007 Falcon averages $7,000, in Brisbane $4,500 and in Melbourne as little as $2,700. The underwriters of third party property are the same in each state such as Zurich, Allianze, QBE and CGU who generally deal through licensed brokers or in the case of Victoria mainly unregulated and unlicensed so called ‘taxi clubs’.

Until a few years ago Zurich held 90% of the Sydney market due to its cosy relationship with the two largest taxi networks, CCN and Premier Cabs, who were by far the largest brokers.

In 2003 I asked a Zurich executive why Sydney premiums were three times higher than Melbourne’s. He replied it was because Sydney drivers had more accidents. When I asked for statistics which substantiated that he replied “Sorry, they are commercial in confidence”. Transparency has never been the insurance industry’s strong suit.

The following year a small unknown Melbourne taxi club, Taxicare, opened a small office in Sydney offering comprehensive insurance at premiums up to 50% lower than those of local brokers. This started a price war, which for a couple of years saw premiums drop dramatically. However, it wasn’t to last. Today Sydney premiums are again by far the highest in the country.

Expanding to Sydney forced Taxicare to comply with stricter NSW regulations. From being a lowly Melbourne taxi club it became a fully fledged underwriter whose AFS Licence allows it to deal in financial products, advising, issuing and handling matters of insurance and finance with business owners/operators and the general public.

Today it insures more than a third of Sydney taxis, 3,500 Australia wide and has offices in Melbourne, Sydney, Brisbane, Perth, Adelaide and Darwin. To experience such growth it must be doing something right.

What is unconscionable is the attitude of Ministries of Transport in various states to insurance regulation for taxis. Given the amount of time a taxi and its drivers spend on the road and that their ‘cargo’ is human beings, stringent mandatory insurance regulations should be in place. They are not. The only thing that is mandatory nationally is CTP.

In Queensland the regulator leaves it entirely up to the operator whether to have comprehensive, personal injury and public liability insurance. Once upon a time Queensland did have compulsory WorkCover for its cabbies, but the Taxi Council successfully lobbied the then Government to annul that and make it optional for operators to insure their drivers and how much for. And despite strong representation from the Workplace Rights Ombudsman and driver associations to re-admit cab drivers to WorkCover, the present government is still kowtowing to the mafia.

A small group of concerned operators last year formed the operators’ association Queensland Taxi Advisers, which now offers insurance to its members at competitive rates on the condition they take out full comprehensive, driver injury and public liability.

While a positive step, it doesn’t fix the problem of rogue operators who skimp on insurance, and only government regulation will pull them into line.

Insurance in Victoria is a basket case. Whilst WorkCover and CTP is compulsory everything else is an unregulated mess. It is estimated that 70% of Melbourne cabs do not have comprehensive or any other kind of insurance and those that do are insured through so called taxi clubs, most of which are rogue unlicensed operations using every trick in the book to avoid paying claims, under insure their members and are grossly under financed.

The current Victorian Taxi Industry Inquiry has received numerous submissions calling for stringent regulation and policing of these ‘clubs’, but so far has shown only minimal interest. Very simply, they should be closed down unless they are able to obtain the legally required licensing from the Australian Securities and Investment Commission.

In NSW regulators have been more diligent. Not only are CTP and Work- Cover compulsory, so is Third Party Property and the regulations state that an operator must indemnify his drivers for all claims as well as any excess. Furthermore, operators cannot charge their drivers a share of any insurance premium, yet NSW operators are surviving very nicely.

Every state government has a moral obligation to mandate that taxi operators provide WorkCover for their bailee drivers and full comprehensive and public liability insurance for their vehicles. There are too many shonks operating taxis to leave such vital decisions to their discretion.


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OZ Cabbie February 2017

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