The mounting costs of commercial auto insurance for taxi operators in Newfoundland and Labrador have impacted the industry so much that there are now fewer taxi drivers operating in the region due to how prohibitively expensive the insurance can be.
Chris Howlett, the owner and operator of the St. John’s cab company Jiffy Cabs, explained that his company is operating with fewer vehicles than before the pandemic. Jiffy Cabs went from operating 80 cars in 2019 to 55 this year, thanks to a drop in the number of drivers and rising insurance costs.
"Rates had increased 250 to 300% … just given that we're pigeonholed into facility insurance, which is the insurer of last resort,” Howlett told CBC.
According to Howlett, insurance prices for the company can range between $8,000 and $12,000 per car, annually. But insurance is not the only expense the cab company is facing – other costs such as fuel and purchasing second-hand vehicles to use as cabs have virtually doubled over the last year, the company owner said.
"It's like a well-timed mini-disaster after mini-disaster after mini-disaster.”
The Insurance Bureau of Canada (IBC) agrees that NL pays some of the highest auto insurance rates in Atlantic Canada, and taxi drivers are also affected.
"One of the things that really differs between Newfoundland and Labrador and the rest of the Atlantic region, it's something as simple as claims drive premiums," IBC Atlantic vice president Amanda Dean told CBC.
"If claims are higher, premiums have to increase in order to ensure that there's enough money in the pool within that jurisdiction to pay those claims."
Dean also explained that auto insurance in NL works differently from the rest of Atlantic Canada, as while the Maritime provinces have a cap on the amount of money awarded from a minor injury claim, NL does not have such restrictions. The vice president also added that NL does not even have a definition of which types of injuries constitute as “minor.”
The IBC vice president also cited data from NL’s Public Utilities Board, which showed that cab companies operating in 2016 paid around $2.8 million in premiums but paid out around $5 million in claims.
Even as far back as 2020, NL’s taxi companies have raised their concerns about their spiking insurance prices, thanks to runaway injury claims. On that year, the trade group Taxi-NL named former St. John’s mayor Andy Wells to act as chair and consultant to the organization. According to Wells, the issue of NL’s rising taxi insurance rates is due to large settlements with individuals who filed claims for soft tissue injuries sustained from car accidents.
