The American Transit Insurance Co., New York’s largest insurer of taxi cabs, is insolvent by approximately $665 mn and must consider all options for recapitalization, New York Department of Financial Services officials said.
The company has been instructed to immediately pursue all available options for securing capital, including a potential sale of ATIC to a party capable of providing the needed funds.
ATIC has insured New York’s iconic yellow taxis for 52 years. ATIC must take immediate action to cure its insolvency in order to protect New York policyholders.
Bernard Ganley, deputy superintendent for insurance with the New York Department of Financial Services
According to BestWire, a consulting actuary for ATIC stated in the December 2023 annual report that the company should have reserves of about $878mn but only holds $187mn, leaving a $691mn shortfall. The company currently reports a $26mn surplus.
ATIC’s actuary estimates insolvency at around $665mn for claims from past accidents that should be covered by reserves.
These claims involve personal injury, property damage, and medical expenses that New Yorkers rely on the insurer to pay.
Without a significant capital injection, the company can only use current premiums to pay past claims, leaving no resources for new claims from current policyholders. This poses a serious risk to ATIC’s future stability.
Inadequate reserves were first noted in 1979, and the deficit has continued to grow. By the end of 1986, ATIC was deemed insolvent by $6.2mn. This figure increased to $39.9mn by the end of 1989 and reached $79.3mn by 1997. By the close of 2013, the deficit had risen to $254.4mn.
The Department of Financial Services (DFS) has repeatedly attempted to work with ATIC over the years to address its financial issues, using court actions, voluntary capitalization agreements, and regulatory discussions.
Earlier this year, Uber Technologies filed a lawsuit against ATIC, its drivers’ auto insurer, for defense and indemnification over unpaid claims from about two dozen accidents in New York City. Uber was named in 23 lawsuits related to accidents occurring between 2016 and 2023.
Drivers were required to carry commercial auto liability insurance of at least $100,000 before operating on Uber’s platform.
