Latest News

IAG, Suncorp urge ‘clarity’ on ride-share sector

28-10-2015

The rapid growth of ride-sharing services such as Uber amid an inadequate legal framework has created a gap in insurance cover, IAG says.

It has called for “regulatory clarity” to let insurers develop products for the sector.

“Existing insurance policies cater to either commercial or private use of an asset,” IAG told the NSW Government’s Point to Point Transport Taskforce. But “digital disruption… is blurring the distinction between personal and commercial asset use”.

IAG argues insurance premiums should reflect the use of private vehicles for ride-sharing purposes.

“Regulatory settings that confirm the legality of these services – as well as appropriate categorisation and classification of vehicle usage for insurance purposes – will enable the development of appropriate insurance solutions.”

The insurer has attracted criticism from the taxi industry for covering Uber drivers through its subsidiary NRMA Insurance. It insists it is simply offering its customers protection “until greater regulatory certainty is available”.

IAG says it has made a “discretionary decision” to insure customers who occasionally use their vehicles for Uber.

“Uber drivers are excluded from most Australian insurance policies due to ambiguity about the legality of the service,” its submission says.

“The cover offered by IAG is an interim measure to limit the exposure of IAG’s customers until governments are able to provide greater certainty about the legality of, and the regulations that apply to, non-traditional transport providers.”

It calls for a “clear, consistent regulatory framework” nationwide that will allow insurers to customise business models to the growing ride-sharing sector.

Despite the legal and regulatory uncertainty, IAG estimates Uber has grown 700% since January last year and has 9000 drivers in Australia.

It says the average Uber driver in Sydney drives 20 hours a week.

“The activity of ride-share drivers is a combination of private and commercial use of the vehicle.

“An insurance solution should be designed to ensure the individual’s asset is covered when they are using it for personal purposes and when they are using it in the sharing economy.”

Until governments provide regulatory certainty, insurance companies cannot provide relevant products, IAG says.

Suncorp, the only other insurer to make a submission to the taskforce, has called for a “simplified and flexible regulatory environment” for the sector.

“The regulatory environment must… accommodate emerging business platforms, developed as a result of new technologies, that have the capacity to deliver transport services consumers want,” Suncorp says.

“Evolving the current regulatory environment for these services needs to take into account insurance issues.”

The taskforce is expected to report to the NSW Government this month.

REF: link

Close