Lyft, Uber back insurance measure

by Carolyn Said, San Francisco Chronicle

LIU MEMORIAL smCalifornia’s Senate and Assembly overwhelmingly passed legislation imposing new insurance requirements for on-demand ride services like Uber and Lyft, after the two companies reversed course to support a scaled-back version of the bill. The Assembly unanimously approved the bill, 67-0, Thursday evening; while the Senate passed it 30-4 on Wednesday.

The bill, AB2293, addresses the insurance coverage during the period when drivers log in to a smartphone app but have not yet been matched with riders. In a well-publicized incident, an UberX driver struck and killed a young girl in San Francisco on New Year’s Eve, reportedly while waiting for a ride request.

Bill author Assemblywoman Susan Bonilla, D-Concord, initially wanted the companies to provide $1 million of commercial coverage during this period. In its final form, the bill requires them to provide $200,000 of coverage, on top of insurance either from the companies or drivers providing $50,000 per person, $100,000 per accident, and $30,000 for property damage. An earlier version required $300,000 per accident.

The bill also calls for the companies to provide $1 million in insurance once drivers accept a ride request, something they already do under regulations from the California Public Utilities Commission.

“This bill creates a policy that is both affordable and flexible, but still ensures corporate accountability,” Bonilla said in a statement. “My ultimate goal was to demonstrate that business innovation and consumer protection are not mutually exclusive, while also facilitating the maturation of this new industry into our economy.”

Until two days ago, Uber and Lyft had campaigned ferociously against the bill and another one regarding driver background checks, with Uber asserting that the very future of ride services in California was at stake.

The last-minute deal to lower the limits won both companies’ support.

“We have agreed to a compromise that provides clarity for the ridesharing community in California,” Lyft said. “However, a truly permanent solution must include the creation of modern insurance products tailored for drivers who participate in peer-to-peer transportation.”

In fact, that aspect is built into the bill, which would take effect in July and would expedite approval of new insurance products for ride services.

The insurance industry, which supported the bill, said it is ready to craft such products. “Everyone will work together on this,” said Nicole Mahrt Ganley, a spokeswoman for insurance association ACIC/PCI, which supported the bill.

Gov. Jerry Brown’s office has indicated he will sign the amended bill.

The Consumer Attorneys of California, which originally backed the bill, said the new version is too watered-down.

Meanwhile, the other bill regulating ride services, AB612 from Assemblyman Adrin Nazarian, D-Van Nuys, which would have toughened requirements for driver background checks and drug and alcohol testing, failed to make it out of the Transportation Committee this week.

“The bill is dead; we didn’t have the votes,” said Dan Savage, Nazarian’s chief of staff. The measure would have required the companies to get driver background checks from the state Justice Department and driving record information from the DMV. Those agencies will provide that information only if the Legislature requires them to, Savage said. It also would have implemented periodic drug and alcohol screening, and barred the companies from hiring drivers within seven years of felony convictions for such crimes as fraud, forgery or larceny. Savage said all those requirements are identical to those for taxi and limousine drivers.

Thad Kousser, a political science professor at UC San Diego, said the bills’ process showed Uber and Lyft flexing new PR and lobbying muscles – successfully.

Uber, for instance, sent e-mail blasts to its California riders with dire warnings about the bills’ impact, and ran a number of newspaper and radio ads.

“They had an ability to mobilize grassroots support that’s almost unparalleled because of the digital reach of their consumer network,” Kousser said. “If I buy a Coke, Coke doesn’t have my e-mail. If I ride Uber, Uber does have my e-mail.

“One of the most important pieces of real estate in lobbying is a good e-mail list of people who like your product,” Kousser said. “To be able to immediately generate e-mails to millions of Californians who you know want to keep Uber and Lyft cheap can really increase your ability to keep pressure on legislators.”