Earlier today, I received an election-style flyer in my mailbox.  The timing is a bit unusual, as it isn’t quite election season yet.  But one look at the return address confirmed my suspicions.  It was Uber trying to sway public opinion on California State Senate Bill AB 2293, and ostensibly, California State Assembly Bill AB 612.

Background

If both bills are signed into law, ride share services, like Uber and Lyft, would be forced to carry the same level of commercial insurance as taxi drivers have to, whether they’re carrying passengers or not.  It would also require that drivers go through background checks, obtain permits, and maintain their vehicles.  Additionally, it would give the California Public Utilities Commission (CPUC) jurisdiction to enforce such laws.  

Both bills are supported by the taxi and insurance industries, who hope to force ride sharing services to compete on the same level playing field as they have to.

As you can imagine, the issue is complex.  Today, a ride share driver is covered by their personal auto insurance.  When the app is turned on and they’re carrying passengers, drivers are normally covered by commercial liability insurance by the ride share company.  If not, the driver should be carrying commercial insurance.

However, most drivers don’t bother seeking out commercial insurance of the prohibitive cost of doing so.  Instead, drivers skirt around that issue by lying to their own insurance companies.  They just don’t disclose the commercial use of their personal vehicles.

Additionally, drivers should already be undergoing background checks, according to the ride share companies.  But a NBC LA investigation found otherwise.

The taxi industry (and other Transportation Network Companies, TNC’s, by extension) says that’s unfair.  Why do they have to play on one playing field while ride share drivers, who perform the same job, get to play on another.  In addition, they argue that safety of consumers becomes an issue when a driver does not have adequate insurance coverage nor undergoes a thorough background check.

The insurance industry says that’s fraud.  They want consumers to pay for the right insurance coverage if they’re using the vehicle for commercial purposes.

Ride share companies contend that the regulations are unfair and an undue burden on them and their drivers.  After all, where do you draw the line between commercial and personal use of an automobile.  They also content that Senators are being duped by a powerful taxi and insurance lobby who want to shut down their companies.

My Take & Solution

I’m a pragmatic kind of guy.  Ultimately, the safety of the consumer is of the upmost importance.  You have a new type of service being forced to comply with old-world regulations.  You also have an older service being hamstrung by these same regulations.  And you have an insurance industry that’s foaming at the mouth at the idea of generating more revenue.

There are no incentives to innovate and a lack of motivation to find a middle ground.  The losers (and victims) are consumers like you and I.

What we need is levelheaded regulation.  How do we best protect customers and foster innovation?  Here’s my idea:

First, engage the California Department of Insurance to facilitate talks between taxi, ride sharing, and insurance companies.  Let’s come up with a hybrid insurance product and a set of rules that allow for a half-commercial, half-personal audio insurance product to exist in the marketplace.

Second, let’s engage the CPUC and Department of Consumer Affairs in these same discussions to provide insight on what kind of protections should be afforded to consumers no matter what type of transportation they take.  I would imagine that there should be background checks for all drivers, regular vehicle inspection, extended jurisdiction of transportation inspectors to inspect personal vehicles used for ride sharing services, and so on.

Third, let’s engage airport authorities and municipalities on how we could create a consistent statewide framework that allows for fair fee collection, a fair and competitive marketplace, and consistent enforcement on the ground.

Bottom Line

At the end of the day, this should not be an argument about how best to protect one transportation method or industry over another.  We need to protect the lives of every consumer in any hired form of transportation, period.  Be it a limo, a taxi, a ride share vehicle, or a chartered bus.  Every consumer should expect that these vehicles are safe, clean, operated by trained drivers, and carry adequate protection and insurance coverage in the event of an accident.  And once we have those assurances in place, we then be able to ensure that every TNC is competing on a level playing field, thus laying the groundwork for true innovation.

What the lobbyist on all sides are engaging in right now is a game of political Russian roulette.  And, at the moment, no one is going to take responsibility if (and when) there is a fatal catastrophe.

Instead of shaming politicians and each other, every stakeholder in this situation needs to step up and take personal responsibility to solve this conflict together. So to Travis Kalanick, Logan Green, William Rouse, David Sampson, and Michael Peevey, I have this simple question I’d like for you to answer publicly.  How would you want to protect your mother, father, child, or family member if they were a regular customer of these hired transportation services?