American Transit Insurance Company: Financial Troubles and Their Impact on Drivers

American Transit Insurance Company Faces Financial Trouble

Carlos Quiles, who was injured in an Uber accident in May 2022, is struggling to receive the insurance money he needs to cover his medical bills. The driver's insurer, American Transit Insurance Co., has yet to make the necessary payments. Quiles' lawyer has been in negotiations with the New York-based company for nearly two years.

Delays and Frustrations with American Transit

According to a report by Bloomberg, Quiles is not the only one experiencing frustrations with American Transit. The company, which insures over 60% of commercial taxis and rideshare vehicles in New York City, has been accused of repeatedly failing to honor coverage for rideshare drivers involved in accidents. Even Uber Technologies Inc. is suing the company, alleging that these delays have led to 23 lawsuits against Uber and its drivers.

Financial Struggles and Regulatory Intervention

While American Transit's attorneys deny the allegations, the company continues to face financial difficulties. In the second quarter, it reported losses of over $700 million, prompting state regulatory intervention. The company's Chief Financial Officer, Christopher Ryan, and other representatives have not responded to requests for comment.

Insufficient Reserves and the Risk to New York's Transportation Network

Since 2021, a third-party actuary reviewing American Transit's financial statements has repeatedly stated that the company's reserves are inadequate. The company disputes this claim, but without new capital, it risks being unable to pay claims or insure drivers. This could threaten New York City's transportation network, which relies on over 117,000 cabs. If another insurer steps in, drivers could face higher premiums.

Protests and the Impact on Drivers

Drivers currently insured by American Transit pay between $4,000 and $6,000 annually. However, competitors argue that these rates do not match the risk. If premiums rise, costs could increase by 30%, putting further strain on an industry already burdened by rising expenses and heavy debt. In response to these challenges, drivers have protested against Uber and Lyft for reducing their access mid-shift, which cuts their earnings.

Efforts to Address the Issue

New York's Division of Financial Services is reportedly working with American Transit and other stakeholders to address these financial issues. The goal is to protect drivers, passengers, and the stability of the New York livery insurance market.

Bottom Line

This situation raises important questions about the financial stability of insurance companies and the impact on those they insure. What are your thoughts on this issue? Do you think more should be done to ensure that insurance companies are financially stable? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.