California Forum

Another View: Insurers win, consumers lose in California ridesharing crackdown

Ridesharing companies and their customers are the newest target of California’s bizarre crusade to crack down on Internet-powered businesses (“Risky business behind wheel of new economy”; Forum, June 22). This time, regulators are getting help from deep-pocketed insurers and personal injury lawyers who look at the sharing economy and see dollar signs.

The ostensible target of this latest misadventure: something called an “insurance gap” when consumers get a ride with a Lyft or Uber driver instead of a taxicab.

In any place but Sacramento, the fact that both companies insure passengers up to $1 million per ride – massively more than the state minimum – would make the term “insurance gap” absurd. But in the state Capitol, absurd sometimes becomes the basis for another misguided regulation of innovation.

It’s a pretty short list of things that personal injury lawyers and big insurers agree on, and that list begins and ends with money.

For insurers they create a government-guaranteed revenue stream by forcing ridesharing companies and their drivers to carry ludicrously large amounts of insurance. For personal injury lawyers, giant insurance mandates ensure bigger piles of money to go after. The attorneys and insurers will fight like hyenas over that money if this law passes, but for now, they’re both hunting the same prey.

Sometimes fixing bad Internet policy is as simple as educating policymakers. But here, two deep-pocketed groups have strong interest in ensuring that regulators and lawmakers stay in the dark.

Fortunately for the sharing economy and the consumers who depend upon it, the facts are tough to dispute.

Lyft, for instance, backstops drivers’ personal insurance with $100,000 in coverage when they don’t have a passenger in the car. The moment a passenger steps in the car, the coverage goes up to $1 million, which is the same amount California taxi drivers are required to have. There’s no gap for riders, none for drivers and none for Californians.

This latest push also threatens innovation in the insurance marketplace. Insurers are modifying policy coverage and premiums to how their customers use their cars. Lyft and MetLife recently announced a unique agreement to develop an insurance offering that is tailored for ridesharing.

Rather than bullying companies and consumers into footing the bill for coverage they don’t need, insurers should think about evolving their old business models to meet the real needs of a growing Internet economy.