Insurance rates for taxicabs in the Distrcit of Columbia are being reduced as the result of a more competitive market sparked by a change in policy duration.
Acting Commissioner Thomas Hampton of the District of Columbia Department of Insurance, Securities and Banking (DISB) said he anticipated the rate reductions following a lengthening of the policy length from two weeks to six months.
“The lower rates reflect a more competitive marketplace for the District’s taxicab insurance premium,” said Hampton about the six-month policy duration. “This is exactly what we wanted to see—a taxicab insurance industry that is more competitive and comparable to the rest of the country and the industry standards.”
For decades, D.C.’s taxicab insurance industry used the two-week policy. This meant that District taxi drivers had to pay a rate based on a biweekly basis. As the District was the only jurisdiction still using this, it was difficult to competitively price the insurance rates or attract more insurance companies to provide insurance to District taxicabs, according to officials
DISB issued bulletins on Dec. 15, 2005 that changed the duration of insurance policies from two weeks to six months and prohibited insurance companies from paying sticker or collection fees to taxicab companies. It also required insurers to submit premium rate filings based on their own loss and expense experience.
The bulletins were issued based on a series of meetings with insurance companies, taxicab companies and the taxicab driver community. After a year of meetings with the insurance companies that provide coverage to taxicab drivers, officials decided that January 2006 would be the implementation date for the six-month policy provision of the rulemaking. DISB has allowed the insurers until July 2006 to develop a plan for offering the additional coverage required by the bulletins.
As a result of the changes, the insurance providers lowered their rates to stay competitive. Among the four taxicab insurance providers in the District—Amalgamated, Crown, Columbia Federal and Equitable Liability—three filed lower rates under the six-month policy than under the two-week policy (on a bi-weekly basis). Crown, as a captive insurance company, is not required to file rates and its rates remain the same.
“This is an important first step in reforming the industry,” said Causton A. Toney, chair, the District of Columbia Taxicab Commission. “In the end, taxicab owners will see wider options for providing better coverage at an affordable rate.”
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