Cedric Stephens | Ridesharing disrupting transport and motor insurance sectors

Uber, other overseas and local ridesharing companies, and local private interests are disrupting Jamaica’s transportation sector.

These developments are also affecting the island’s $25 billion motor insurance segment. This newspaper’s June 6 editorial, ‘Procrastinated too long’, which said that Mr Daryl Vaz, the telecommunications and transportation minister, “cannot escape a perception, despite his insistence to the contrary, that (his response to the Danielle Anglin’s murder) was a knee-jerk reaction rather than a measured, even if right, policy decision”, should be understood in the context of the upheaval.

The commentary, however, ends with a sentence that spoke about the absence of a ‘policy framework’ for ridesharing vehicles. If no policy framework exists, is it accurate to call Mr Vaz’s action a ‘policy decision’?

The editorial was correct to highlight the dawdling by the portfolio ministry, and, in my opinion, lawmakers. My Gleaner article of January 20, 2017, ‘When Uber Comes to Jamaica, What’s Likely to Happen?’, discussed some of the effects, risks, and insurance implications of ridesharing. It was published four years before the company entered the local market.

There were two predictions in the article. One was that Uber was coming – no ifs, buts, or maybes. The second was that Uber would disrupt the transportation sector.

Both things have happened. What I did not foresee, however, was that local and overseas entrepreneurs would have developed competing applications that enabled them to enter the ridesharing business and compete with Uber, a company whose services are now available in 10,000 cities.

The Gleaner has reported Transport Authority’s Managing Director Ralston Smith as saying that the agency is “in the process of establishing a regulatory framework for ride-hailing (sharing) entities. Its aim is to “provide oversight for how industry players attract and retain drivers”.

If that statement is accurate, the Transport Authority’s technical working group’s mission is too narrow. However, I agree with its statement that ridesharing companies must comply with existing requirements for public passenger vehicles, mainly the Motor Vehicles Insurance (Third-Party Risks) Act, or MVITPRA, and the new Road Traffic Act.

It was disappointing to learn that motor insurance interests were not part of the of technical working group, and possibly because of that, there was no reference to Section 4(1) of the MVITPRA in Mr Smith’s statement. He ignores the risks ridesharing poses to other important groups - ridesharing passengers, vehicle owners, other motorists, their passengers, pedestrians, and other road users.

This business model poses risks to society at large and not just to persons who use the services and drivers.

Road traffic accidents are a public-health issue. Opposition Member of Parliament Mikael Phillips recognises this. He spoke about Jamaica’s high road fatality figures. The frequency of these events, he said, “placed the country at the top of the list in relation to road fatalities in the region of the Americas”. The insurance sector plays a key role in helping the society manage some of its risks vehicles create on public roads.

Section 4 of the MVITPRA, when it was crafted nearly 90 years ago, stated that “it shall not be lawful for any person to use, or to cause, or permit any other person to use a motor vehicle on a road unless there is in force in relation to the user of the vehicle by that person or other person, as the case may be, such policy of insurance … in respect of third-party risks as complies with the requirements of the act”. This law is still valid today.

Here are two takeaways from my 2017 article predicting the coming of Uber:

• Vehicles in the ridesharing business and which are not designated by the authorities as public-passenger vehicles, or PPVs, do not comply with the Motor Vehicles Insurance (Third-Party Risks) Act while engaged in those activities. Because of this, they are effectively uninsured; and

• Uber and other international ridesharing companies have solved the insurance problem their business model has created. Their experts have developed special coverage to protect Uber and their drivers worldwide. It is triggered when drivers respond to a ride request anywhere around the world. Coverage ceases when the journey comes to an end. The normal non-Uber motor insurance applying to the vehicle resumes.

Vehicles that are licensed and insured for private use and are used for hire or reward or the carrying of fare-paying passengers are breaking the law. This is why the authorities issue red plates to PPVs and white plates to private cars and private motor insurance prohibits use for hire or reward or the carrying of fare-paying passengers. Robot taxis are private cars that operate illegally while displaying private car licence plates.

The authorities have taken steps to curb indiscipline and wrongdoing on our roads. One is the installation of closed-circuit TV cameras along major roadways and at important intersections. The CCTV network can detect and record road traffic violations and read the numbers on the vehicles’ licence plates.

Another step is found in Part VII of the Road Traffic Act – regarding electronic monitoring and surveillance – Sections 237 to 241. Eight offences are listed in Section 238 that can be detected by the electronic monitoring or CCTVs. Below are three offences applying to PPVs and private cars:

• driving a motor vehicle or causing a motor vehicle to be driven on a road without it being registered in the prescribed manner;

• driving a motor vehicle or causing a motor vehicle to be driven on a road without it being licensed in the prescribed manner; or

• driving a motor vehicle or causing a motor vehicle to be driven on a road without the required motor vehicle insurance coverage.

Motor vehicle records are digitised. The authorities also have an up-to-date list of all the insured vehicles. Data from these sources plus photos or videos from CCTVs or other surveillance devices provide the authorities with information they can use to influence the behaviour of motorists. Section 241(1) of the act is the kicker. It says: “Where an electronic detection device captures a photographic image or video recording of a motor vehicle that is involved in the commission of an offence referred to in Regulation 238, the owner of the motor vehicle, having been served with a notice of the offence, shall be responsible for the payment of the penalty for the commission of that offence.”

The authorities have or are in the process of developing a capacity to remotely monitor compliance with the new Road Traffic Act and the Motor Vehicles Insurance (Third-Party-Risks) Act and can impose fines on vehicle owners who violate these laws.

It remains unclear at this time what documents will be acceptable to the authorities and road users as evidence of motor insurance while ridesharing is taking place and that it complies with the MVITPRA.

The problem created by ridesharing companies is more than just about the attraction and retention of law-abiding drivers. To paraphrase Aldous Huxley: a brave new world is on the horizon.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com