New York officials have told rideshare firms, driver groups, and other for-hire vehicle players to expect insurance rates to climb about 25% on average over the next three years.
People familiar with the plan say the increases will likely spill into passenger fares as the market absorbs the shock.
State regulators have asked insurers to reset pricing to actuarially justified levels. Translation, rates go up. The goal is to stabilise an insurance market rattled by the collapse of American Transit Insurance Co., once the largest provider in the sector.
American Transit built close to 60% market share partly by charging low premiums. Those prices didn’t hold up. Losses mounted for years, and the company lacked the capital to cover what it insured, according to Bloomberg reporting last year.
As part of corrective steps rolled out earlier this year, the Department of Financial Services expects weighted-average premiums to rise roughly 25% across three years.
The information isn’t public yet, and the people discussing it asked not to be named, Beinsure noted.
For drivers, the math stings. Bhairavi Desai, executive director of the New York Taxi Workers Alliance, said the increase could mean up to $1,500 more per year per driver. Her group represents more than 28,000 drivers across the city.
DFS described the phased rollout as a way to give policymakers and industry time to spread the pain. In a memo sent last week, the regulator said gradual increases create space to consider cost-sharing options, including possible fare adjustments. Desai and Uber confirmed receipt of the memo.
DFS said it is finalising rate changes with insurers. Adjustments will roll out starting March 1, tied to individual policy renewal dates throughout the year.
Because approvals apply to average rates, individual drivers may see different increases.
The state can’t order fare hikes. That authority sits with New York City’s Taxi and Limousine Commission, which sets fare rules and decides whether higher insurance costs can pass through to riders.
Still, the notice sharpens concerns from drivers and platforms as inflation already weighs on consumers in one of the priciest cities in the US.
Drivers will receive notice of any premium change at least 60 days before renewal, DFS said.
Desai pushed back hard. She said drivers are being asked to rescue American Transit after the state failed to bring in alternative insurers.
Among other ideas, her group wants New York to explore seed funding for a driver-owned mutual insurance company.
Market concentration remains extreme. The state said just five insurers control more than 95% of the rideshare insurance market.
Uber has warned that higher insurance bills will feed directly into ride prices. The company criticised the state’s response as falling short on deeper legal issues that encourage fraud and drive premiums higher.
Josh Gold, an Uber spokesperson, said raising rates again and again isn’t a fix. He argued the government should focus on why costs exploded in the first place.
Uber has spent heavily on lobbying for insurance reform over the past year. It has also filed racketeering lawsuits nationwide, accusing law firms and medical clinics of exploiting insurance claims and extracting inflated payouts.
According to our analysts, those legal battles sit just beneath the surface of New York’s insurance reset, unresolved and still expensive.
