Big Yellow Taxis and Long Black Cars

By | February 10, 2003

According to the Taxicab, Limousine & Paratransit Association (TLPA), in the U.S. alone there are approximately 6,300 companies operating 171,000 taxicabs. The TLPA, a non-profit trade association representing the private passenger transportation industry, notes that 80 percent of those taxicab operations maintain fleets of fewer than 50 vehicles. Six percent operate fleets of 100 vehicles or more.

TLPA’s membership is a mix of taxicab companies, executive sedan and limousine services, airport shuttle fleets, non-emergency medical transportation companies, and paratransit services with operations all over the globe. The group reports that the 10,200 limousine companies operating in the U.S. represent around 57,000 vehicles, including stretch limousines, luxury buses, luxury vans and executive sedans. About nine percent of the companies operate fleets of over 20 vehicles.

Primarily the result of public-private partnerships in transportation, paratransit organizations operate private sedan, van and minibus fleets that provide service under contract to public or non-profit agencies. There are around 2,100 such contract service fleets in the U.S., operating some 26,000 vehicles.

Like other lines of commercial insurance, the private passenger transportation industry has suffered from decreased availability and higher rates. “Right now it’s just a very tight market and rates have increased dramatically. It’s very difficult for operators to find a company that’s going to stick by them,” said Nick Cambas, president of the local Yellow Cab Company operation in Pinellas County, Fla.

Cambas’ company, which is a division of Coach USA, also operates Transtar Executive Transportation, a premium car unit; Yellow Shuttle, a fleet of airport shuttle vehicles; and a paratransit division in Pinellas County. In addition, Cambas has an equity ownership in Yellow Cab Company fleets in Little Rock, Ark. and Birmingham, Ala. Coach USA negotiates on a national level for insurance for his Florida fleets. But for the smaller entities in Little Rock and Birmingham, “because those are privately owned by myself and about four or five other investors, the market has tightened up dramatically,” Cambas said. “There are probably a handful of insurers that are writing this type of insurance at this time. And I’ve … spoken to other operators who’ve seen anywhere from a 20 to 60 percent increase in their premiums over the past year. So it’s certainly gone up dramatically.”

Brian McBride owner of the Yellow Cab Company in Cleveland, Ohio, said he’s seen a big jump in prices, as well. McBride, who also owns taxi services in several Cleveland suburbs and a livery service in a neighboring community, said at his last renewal his insurer of five years quoted a price increase of 60 to 65 percent-despite the fact that McBride had only filed one claim during the five years he was with the carrier.

In addition, the quote included a higher retention and no increase in limits. “We buy as much insurance as we can afford,” McBride said, and unhappy with the quote from the existing carrier he went shopping, receiving quotes from another, smaller carrier and a risk retention group. McBride said he eventually “found an acceptable alternative,” but continues to take a look at his options.

According to Victor Dizenoff, executive director or the Black Car Assistance Corporation in New York City, “Rates have steadily increased over the last few years. They’ve gone up and they are going up again this year. … Insurance renewals come due on Feb. 28 for the (black car) industry. At that time, the rates should pretty much all be in place and they will be significantly higher than last year. … This is for the black car industry in the New York area … I would venture that this is happening all over the country.”

What do these transportation professionals recommend to their peers and to agents seeking to represent them?

Cambas favors developing long-term relationships. “I’ve enjoyed a long-term relationship with one insurance company and they’ve stuck by us through the good times and the bad. So what I would recommend is trying to stick with one particular vendor rather than jumping from one insurance company to the next. … (You) should develop a long term relationship with an insurance company … so they’re familiar with your business practices and they know they have a loyal client. So hopefully they’re not going to cancel you when things get a little tight.”

“You have to develop relationships (with) the brokers and the underwriters,” said McBride. “Let them know who the drivers are, how the business operates.” He said with smaller carriers it’s sometimes possible to talk directly with the underwriter and noted that he can negotiate his best deal “when I can get in front of the underwriter and explain my business.”

A good driving record helps too. The Black Car Assistance Corporation provides workers’ compensation insurance for the black car industry in the New York area, but “the liability side is pretty much negotiated on an individual basis, because (the drivers) are independent contractors,” Dizenoff said. “So they go out independently and try to find the best rate possible in the marketplace through brokers. Considering that there are very few insurance companies that are writing in this market in New York, they really don’t have that much of a choice. If their records are clean, they’ll get a more favorable rate and a better chance at getting with a better company and a better rate of insurance.”

McBride, Cambas and Dizenoff are chairs of the steering committees within the TLPA for their respective industries. More information on the TLPA can be found at www.tlpa.org.

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal West February 10, 2003
February 10, 2003
Insurance Journal West Magazine

Commercial Auto