There is a very active market for taxicab business. Andy Jaz, director of the taxi program at Markel Corp., explains, "There is a very select market of perhaps six or seven companies, but new competition is always coming and going."
Markel, Scottsdale, National Casualty, National Indemnity, Essex, Evanston, Starnet, Canal, and Sparta are markets our experts use.
"Because of the prolonged soft market, we've seen some carriers with a B rating that have reached out and considered classes that they didn't historically write," according to Rebecca l. McNabb, transportation manager at Burns & Wilcox. "I can offer an account coverage with an A rated carrier and explain that this is a financially stable company that will be in it for the long haul, but if the account can find cheaper coverage with a B rated carrier, they'll opt for that."
Robert Alkire, senior vice president at 5Star Specialty Programs, a division of Crump Insurance Services, Inc., agrees. He says, "It seems like capacity has increased over the past year. The market is still very competitive, and pricing is also highly competitive."
"Several new carriers entered the marketplace within the past three years that increased competition and drove the pricing down," says Mark A. Iverson, vice president at AmWINS Transportation Underwriters, Inc. "This negatively affected this class of business, caused loss ratios to turn poor, and made placing those risks difficult."
The primary coverage for taxicabs is automobile liability. The main reason this coverage is necessary is that a taxi cannot operate without valid liability coverage. Municipalities regulate taxicabs. In addition to setting requirements for coverage, municipalities also establish minimum levels of coverage.
According to Ms. McNabb, "Because of the economy, many taxi accounts are looking for the cheapest solution, and they're probably going to buy the lowest limit their contract allows. The relatively low liability limit may be inadequate and, if the driver is an owner-operator with just one vehicle and few assets, the injured person might win a lawsuit but still end up with nothing."
However, Mr. Iverson notes, "More airports and other municipalities are requiring higher limits of liability."
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