Sensible solutions for taxis and ride-hailing services – CY Ming

Sensible solutions for taxis and ride-hailing services – CY Ming

Published: 1 February 2016 7:00 AM

Deputy Transport Minister Datuk Abdul Aziz Kaprawi said the government will make it compulsory for drivers of ride-hailing services such as Uber and GrabCar to buy commercial insurance just like taxi operators in order to operate legally.

He disclosed that the Land Public Transport Commission (SPAD) is still in the midst of discussions to regulate the industry, which included making it mandatory for Uber and GrabCar vehicles to undergo periodic computerised inspections at Puspakom.

These measures were aimed at legalising the industry and regulating the operators. He said this is to ensure private vehicles are safe for people to ride in, as the number of phone apps will continue to grow.

However, it should be noted that issues surrounding ride-hailing apps and taxis are highly complicated, otherwise they would have been resolved long ago. The matters mentioned by the deputy minister need to be addressed point-by-point.

The term "commercial vehicle" is clear as these vehicles transport goods or passengers for a fee, except for vehicles rented out by car rental companies. They may be commercial vehicles but customers can only drive them for private use.

Aziz stated "commercial insurance", which is rather confusing, as the most common types cover damages to business property, third parties and workers' compensation.

If he meant commercial vehicle insurance, then there are many types.

Under the Motor Tariff for cars alone, they are categorised under Public Taxis (licensed under Teksi Bermeter or Kereta Sewa), Hire Cars – Chauffeur Driven (licensed under Teksi Limousin), and Hire Cars – Hirer Driving (licensed as Kereta Sewa Pandu).

The Motor Tariff has been in use since 1978 and for a long time, the rates were RM69.80, RM102.50 and RM122.10 for every RM1,000 cover for public taxis, limousine taxis and rental cars respectively, compared with RM26 for private vehicles.

Would insurance companies accept public taxi premiums to insure private vehicles used for Uber or GrabCar services when they are collecting much higher premiums for limousine taxis and rental cars?

These limousine taxis and rental cars look exactly like private cars and are used for chauffeur-driven services, just like GrabCar and Uber. Insurers also charge an additional RM78 for limousine taxis and RM240 for rental cars as premiums for "Passenger Risk Cover" for four adults.

Even if vehicles used for Uber and GrabCar services are covered for legal liability to passengers, those injured inside the car may not receive a single sen in compensation.

Very few people are aware that passengers in buses and taxis are not insured at all. The compulsory insurance for all motor vehicles, including buses and taxis, is to insure the driver for legal liability when sued by injured parties.

For example, passengers injured in a taxi through no fault of the driver would have to sue the driver of the other vehicle that crashed into the taxi. The same applies to a GrabCar or Uber vehicle even with "Passenger Risk" cover.

Should the driver of the taxi or private car was at fault and insured for "Passenger Risk", the insurance company could still withdraw the legal liability cover if the driver was found driving under the influence of drugs or alcohol, or violated one of the many clauses included in the terms and conditions of the motor insurance policy.

Also, injured victims would have to wait many years for the court to award compensation and receive payment from the insurance company. Under existing laws, most accident victims suffered a double blow, one for the injury and the other the long agonising wait for compensation.

The legal liability insurance should be replaced with Personal Accident Insurance (PAI) as compensations are speedily paid out without having to establish fault. A RM100,000 cover may not be adequate for the rich or high-income earners but they are likely to have their own life and general insurance.

Together with RM20,000 cover for medical expenses, many injured victims can seek treatment at private hospitals.  

What the Transport Ministry should do is to amend antiquated laws requiring all motor vehicles to be insured for third party injuries, and public service vehicles such as buses and taxis to be covered for legal liability to passengers, be replaced by PAI cover.

And the only way for private cars to provide transport for a fee legally is to amend existing laws.As all commercial vehicles are under the purview of SPAD under the Prime Minister's Department, the Transport Ministry will have to work with SPAD and not issue statements on its behalf.

SPAD was fully operational on January 31, 2011 and since inception had not added more metered taxi permits in the Klang Valley due to the oversupply. If private cars are allowed to provide transport for a fee, taxi permits should also be granted to any individual that qualifies.

Those choosing to operate taxis may purchase new vehicles with excise duty exemption but pay higher motor insurance premiums and regulated by SPAD. Drivers preferring to offer ride-hailing services using private cars are to pay excise duty and private car insurance, and regulated by phone apps.

In any case, safety is determined by many factors that affect the driver, vehicle, road, weather and traffic conditions, and not by insurance or whether the service is provided by taxi or private car.

Reducing the frequency of vehicle inspection at Puspakom from six months to a year may increase taxi driver's income for a day but at the expense of safety, particularly when taxis are old.

After the initial inspection, the first three routine inspections can be conducted once annually, and after that every six months during the fourth and fifth year. Taxis operating beyond that should be subjected to inspections every three months.

This will encourage operators to change their taxis every three or five years.

The same applies to private vehicles offering ride-hailing services. – February 1, 2016.

* CY Ming reads The Malaysian Insider.

* This is the personal opinion of the writer, organisation or publication and does not necessarily represent the views of The Malaysian Insider

- See more at: http://www.themalaysianinsider.com/sideviews/article/sensible-solutions-for-taxis-and-ride-hailing-services-cy-ming#sthash.FxA35bnJ.dpuf

Insurers: Private car insurance does not cover Uber drivers 3 Lu Wei Hoong Published Today 10:22 am Updated Today 3:16 pm 6

FOCUS As the war between taxi and ride-sharing applications rages, the debate has largely revolved around how and why services such as Uber and GrabCar are well-received, compared with that from the standard taxis.

Malaysiakini has looked at this extensively in its previous three series on the Taxi-Uber war but in this fourth and final part, we look at how the legal grey area is putting Uber drivers and those they come in contact with at risk.

As regulators figure out how to deal with a novel concept, Malaysiakini has put a question, which many countries are grappling with, to Malaysia's automobile insurers: "Does private car insurance cover Uber drivers in an accident?"

The question is crucial to Malaysians, since Uber only requires its drivers to have an insurance coverage that "satisfies the minimum requirement to operate a private passenger vehicle on public roads".

This is laid out in the agreement Uber drivers must sign when they become Uber partners.

Responding to the query from Malaysiakini, the General Insurance Association of Malaysia (Piam) said private car insurance does not cut it for drivers who engage in ride-sharing activities.

Piam corporate communications representative Nur Fazliana Mohd Zuki said the private car insurance would be rendered useless if drivers engage in ride-sharing, which is deemed to be a commercial activity.

"Therefore owners of such vehicles, drivers and passengers who use their private cars for commercial use will not be able to claim, under their insurance policy, in the event of an accident.

"This risk has to be assumed by the owner himself, who becomes uninsured because the car would have been used for a purpose not covered under the insurance policy. This includes liability for any third party claim as well," Nur Fazliana said.

Furthermore, the Piam representative said, ride-sharing drivers risk facing lawsuits from insurers.

"Under the law, insurers may find themselves having to pay for bodily injury claims to other third parties (TPBI claim), excluding the driver and passenger.

"However, the insurer will have a cause for action against the owner and/or driver, and will recover the full TPBI claim settlement and costs incurred from the owner and driver," Nur Fazliana said.

In Malaysia, a private car is required to have third party insurance policy to cover the liability, including injuries or death caused by the driver, on the other party in an accident, as well as loss or damage to the third party property.

This policy is cheaper than the comprehensive insurance policy, which covers the insured driver's vehicle damage, on top of third party liability. Both types of insurance do not cover passengers.

Uber has own insurance, but grey areas remain

Prior to Piam's response, Uber Malaysia general manager Leon Foong, in an interview with Malaysiakini, stayed coy when asked about a hypothetical situation where Uber drivers are required to take up commercial car insurance.

Malaysiakini has contacted Foong again, in light of Piam's announcement, and is awaiting his response on this.

However, in that interview, Foong(photo) gave his assurance that Uber has taken upon itself to provide insurance for passengers and other third parties, such as if a pedestrian gets hit by a Uber driver.

“We work with a very well-known insurance company and they cover all the rides. This is (third party) contingent liability which covers up to RM1 million," he said, but declined the reveal the insurer.

Foong said that with complete documentation, insurance claims with Uber would typically be disbursed within a month.

He added the company has completed several claims from customers, but stressed that no major accidents involving its drivers in Malaysia have ocurred.

However, Uber's third party contingent liability insurance is not without its problems, as Foong revealed that it only kicks in when Uber drivers accept a ride request from passengers on its application.

This leaves a gap for the period when a Uber driver is logged onto the application while on the road but has yet to accept any ride request, for which he (or she) would be uninsured.

This is in contrast with Uber in the United States, which provides a coverage of US$100,000 for drivers the moment they sign on the Uber application and a US$1 million contingent liability coverage once they accept a ride request.

Foong said this "gap" is not covered as Malaysian insurance companies do not offer such coverage.

The question then is: what happens if an Uber driver accidentally knocks into someone while logged onto the Uber application but has yet to accept a ride request?

Debate surrounding this issue has already raged in several countries, where some argue this period is considered "private use" and "commercial use" only comes into effect when a ride request is accepted.

However, insurers are less than keen on the idea that the vehicle they insure can change between "private" and "commercial" use, like a switch, and may challenge its legality, creating a legal grey area.

Aside from this, another grey area faced is by Uber drivers themselves, as Foong said Uber's insurance in Malaysia only covers passengers and third parties but not the drivers themselves.

"Drivers are covered by their own policy," he said.

With Piam indicating that private insurance policies would become void for ride-sharing drivers, and Uber not covering its own drivers, this would put them in a spot.

These grey areas highlight the challenges faced by the Land Public Transport Commission (Spad), which has to look into a scope of reforms that go beyond finding a solution to end the war between taxi drivers and ride-sharing services.

Until Spad addresses these grey areas, the safest bet is to take Piam's advice.

"If the owner of a private car wishes to hire out his/her car for a 'ride sharing' purpose; firstly to ensure that he will be covered by his insurance company, he is advised to convert his car class for road use to commercial use at the Road Transport Department (JPJ).

"He can then purchase a commercial vehicle insurance policy from his insurer," Nur Fazliana said.

However, commercial vehicle insurance comes at least double the cost of a private car insurance and commercial vehicles are also subjected to various other checks.

This would mean ride-sharing drivers will incur an additional cost, thus reducing their competitive edge against taxi drivers.

Can criminals become Uber or taxi drivers?

Aside from insurance issues, there is also the question of how safe Uber rides are.

This is in light of a high-profile incident in Delhi, India, last year where a woman was raped by an Uber driver.

Foong gave his assurance that all Malaysian Uber drivers would be given a background check by a third party.

“After the (Uber driver's) application is submitted, we let a certified third party company to do a background check on the person, within 24 hours…

“There has to be zero criminal history and clean record in the past seven years in order to be Uber driver," Foong said.

He added that the company has the necessary government certification and licence to conduct such checks, but declined to reveal the name of the company.

However, in the India Uber rape case, the rapist, Shiv Kumar Yadav (photo), succeeded in fooling Uber's background checks by using forged documents.

Uber has since vowed to conduct more in-depth background checks of its drivers.

While the credibility of Uber's background checks may be debatable, there is no known mechanism for background checks on taxi drivers.

The Malaysian Crime Prevention Foundation had in October last year urged Spad to check on the criminal records of taxi licence applicants.

It had also called for taxi associations to take background checks seriously, but there has been no follow-up from the government.