The New York City Council’s transportation committee heard testimony last Monday on a proposal to lower the Personal Injury Protection (PIP) insurance coverage requirement for for-hire drivers from $200,000 to $50,000 per person, aligning it with the state’s requirement for all other drivers.

While the proposal’s sponsor, Council Member Carmen De La Rosa, believes the change would help lower premiums for drivers by as much as $600 a year, the head of the city’s Taxi and Limousine Commission (TLC) isn’t convinced drivers would benefit.

“It is not clear premiums would go down as any savings may be kept by insurers and not passed to drivers,” TLC Chair David Do told the committee.

De La Rosa’s bill is supported by the new coalition, Citizens for Affordable Insurance Rates (CAIR), and by a majority of 51 city council members, according to a press release issued by CAIR. With substantial backing from Uber Technologies, CAIR is advocating for legislation and regulations to lower insurance costs across the state including reforms targeting no-fault insurance fraud and unnecessary litigation. The group began a media campaign last week, calling on lawmakers in Albany to act.

“New York City’s for-hire drivers are paying some of the highest insurance rates in the nation because of an outdated and unfair system,” said De La Rosa, who wants the City Council and TLC to also act.

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For-hire drivers in New York City are required to maintain $200,000 in PIP insurance coverage per person – four times the $50,000 per person requirement for similar drivers throughout the rest of the state.

Drivers of for-hire vehicles, including Uber, Lyft, yellow taxi, and livery, are also covered by additional benefits through the Black Car Fund and workers’ compensation for yellow taxi drivers, which De La Rosa argues diminishes the need for such a high PIP requirement. These benefits, which include coverage for medical expenses, lost wages, and death benefits, also overlap with PIP coverage, making the current $200,000 threshold “redundant and unnecessary,” according to CAIR and De La Rosa.

De La Rosa and CAIR also maintain the lower PIP mandate could help reduce the incentive for fraud. According to a report by the New York State Department of Financial Services, suspected no-fault insurance fraud reports accounted for 75% of all fraud reports the department received in 2023.

Uber has filed a racketeering lawsuit against a group of law firms, doctors and pain-management clinics it claims staged fake car accidents and performed unnecessary surgeries to take advantage of New York’s no-fault insurance system.

Uber Alleges Fraud Scheme by New York Groups Faking Car-Crash Injuries

But TLC’s Do questioned whether the lower PIP benefit would reduce fraud, referring to reporting that he said suggested fraudsters would “just cause more crashes to reach the profit margins they need.”

According to De La Rosa, the higher PIP mandate is an unfair and unnecessary burden because TLC data show the rate of serious accidents is “extremely low” for for-hire vehicle drivers.

Backers of De La Rosa’s bill see it attracting more insurers to the city’s for-hire market at a time when the insurer for more than 60% of the market, American Transit Insurance Co. (ATIC), is facing insolvency. ATIC has claimed it, too, has been a victim of no-fault system fraud.

Related article: New York City’s Biggest Taxi Insurer Is Insolvent, Risking Transit Meltdown

Do pointed out that the state, not the city, regulates insurance, although TLC was responsible for raising the PIP requirement to $200,000 in 1998. TLC also recently withdrew a rule change that would have required all insurers to be “solvent,” which could have limited the marketplace in light of financial issues facing ATIC.

Do said the multiple insurance sources assure that everyone is protected and compensated and he defended the high PIP requirements as appropriate because New York City is a “whole different creature” with professional drivers who work full-time, not part-time as is the case elsewhere.

De La Rosa said there are “ample buffers” to assure everyone is compensated.

De La Rosa acknowledged that her bill will not alone fix the problem of high insurance costs. “It’s not a magic remedy but it is a tool,” she offered.

TLC licenses and regulates New York City’s yellow taxi cabs, for-hire vehicles (community-based liveries, black cars and luxury limousines), commuter vans, and paratransit vehicles. There are more than 200,000 TLC licensees.

This article was previously published by Insurance Journal. Reporter Andrew Simpson is the former chief content officer of Wells Media.