Uber may be driven from Boston by proposed rules

Printed from: https://newbostonpost.com/2015/09/23/uber-may-be-driven-from-boston-by-proposed-rules/

An Uber bill pending in the State House would throttle the car-ride service in Massachusetts by saddling drivers with costly insurance requirements and intrusive background checks, according to both the company and a Pioneer Institute analysis.

The bill, H.3702, would force drivers for ride-sharing companies to take out $1 million liability policies that would cover them at all times, not just when picking up and transporting fares, the study from the nonprofit public-policy organization says. The measure would also go further than other proposed regulations in requiring would-be drivers for Lyft, Uber and others to provide fingerprints and submit to background checks against multiple databases for criminal records, according to Pioneer’s analysis.

Sponsored by state Sen. Linda Dorcena Forry (D-Dorchester) and Rep. Michael Moran (D-Brighton), H.3702 goes further than others in requiring commercial insurance coverage and driver screening, according to the study by Matt Blackbourn, a Pioneer staff member. Another proposal, from Gov. Charlie Baker, a Republican, would impose lower insurance costs than H.3702 while still regulating Uber and other car services that rely on digital systems to connect drivers with riders, Blackbourn said.

Uber generally provides its drivers with the insurance called for under Baker’s measure, while the more extensive coverage that would be mandated by the Dorcena Forry-Moran bill would probably cost each driver from a few thousand dollars to $10,000 a year, Blackbourn said by email. He said that while he hadn’t specifically analyzed the insurance provisions of the bill, those prices reflect the typical costs for that level of commercial coverage.

“When you look at current numbers for Uber employees – in Boston alone there are over 10,000 Uber operators – and consider how a majority of Uber drivers are working 15 hours per week or less and nearly half have separate full-time jobs, the commercial insurance cost would be an enormous disincentive to continue work,” he said in the email.

The extent of insurance coverage is a key factor in judging the effects of each measure, in Blackbourn’s analysis. He said the mandated $1 million minimum at all times for ride-sharing drivers “would kill their business.” And he points to Boston Globe reports that showed many Boston taxi companies maintain just the minimum levels of bodily injury coverage of $20,000 per person and $40,000 per accident for their cabs.

Massachusetts would follow dozens of others should it enact regulations governing Uber and other “transportation network companies,” a term coined in California, Uber’s birthplace, Blackbourn said. He cited an Uber official in saying the common elements in current local laws are registration for the companies, a screening system for drivers, safety inspections for their vehicles, fare transparency and at least $1 million in liability coverage that’s in effect when a driver has booked or is carrying a passenger.

Uber has strongly objected to the Dorcena Forry-Moran proposal, saying most of its drivers operate on a part-time basis. In an appeal to Bay State residents, Uber is asking for support in pressuring lawmakers to reject the bill. An online petition circulated by the company says: “Taxi special interest groups are trying to pass a statewide law to force Uber out of Massachusetts.”

“Uber has created thousands of jobs, millions of dollars in economic activity, and countless safe, affordable rides,” the company says. “The proposals that Representative Moran and Senator Dorcena-Forry have put forward make no effort to reform a dated and largely broken taxi system. Instead they threaten a new transportation industry that is bringing real benefits to Massachusetts — all simply to protect the pocketbooks of a few taxi company owners.”

In an opinion piece published in the Boston Globe, the lawmakers faulted Uber for attacking their measure rather than offering to work with them to refine it.

“Uber has decided to mislead the public and its employees,” the lawmakers wrote in the August op-ed. “In no way are we trying to ‘destroy’ companies like Uber. We recognize the positive economic impact these companies have for individual drivers and their families — along with the commuting public.”

They also noted requirements for in-state vehicle registration, handicapped access and posting prices to make clear what a ride will cost before a passenger accepts it, saying they merely want to put ridesharing services on an equal footing with taxis. But they didn’t mention the insurance levels the bill stipulates. The lawmakers didn’t respond to requests for comment.

For taxi companies and their drivers, the issue comes down to economic survival.

Cab owners, who typically lease their vehicles to drivers, pay hundreds of thousands of dollars to obtain the medallions that license their vehicles for taxi services. Boston limits the number of medallions, which helps prop up their prices. But ridership has fallen in recent years, including a 12 percent drop in 2014, according to a report in CommonWealth magazine, and that has fueled a 40 percent plunge in medallion values, to about $400,000 this year.

Many cab drivers blame the drop in fares on ride-sharing services.

“There are only 1,825 taxis on Boston streets to 10,000 Uber vehicles. Eliminate half of them with these regulations, do the math, it is 5,000 to our 1,825 cabs,” Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers Association, said in an email. “It is difficult to see how regulations that are essentially the same as the taxi industry will destroy a $50 billion business.”

While the Dorcena Forry-Moran proposal may deter some part-time or “week-end drivers,” Blythe-Shaw said, “Uber is entrenched in the City of Boston. Licensure, vehicle inspections, markings, in state license/livery plates, $1 million dollar insurance will not kill Uber. “

The drivers union has long called for action on regulating ride-sharing services, saying that without it, their industry and public safety is threatened. Many drivers and supporters wearing yellow BTDA T-shirts demonstrated at the State House in mid-September to protest the lack of regulation on rides-haring services and to press lawmakers for reforms.

“When the system allows an illegal, unregulated business to supplant a legal regulated business then that system is broken,” Blythe-Shaw said in a post Monday on the BTDA’s Facebook page. “The Taxi Industry is broken. It is a complete injustice to you. We have no other choice, but to continue the struggle until justice is done.”