City Coming Back… On Foot?

Taxi And Van Underwriting Issues Threatens New York City’s “Return To Normal”

A looming crisis could slow the comeback of New York City – removing wheels from the equation.

 An actuarial report has hit at American Transit Insurance Company’s reserves, putting the main underwriter of critical transportation classes into a dubious spot.

ATIC has long been considered by many as a kind of “assigned risk” plan, an insurer of last resort for a key industry in its way, and its results show the scars.

The Brooklyn, N.Y.-based carrier sells insurance to taxi and livery fleets and commercial vehicles, mostly in New York City and has done the City and its citizens a good service for  many years.

Now that the system – and ATIC – appear to be stressed, there is no easy relief in sight. Based upon the DFS’ petition contending that Park Insurance is insolvent, the court has ordered that it be liquidated.

Other enterprises appear limited as well, leaving ATIC with a daunting job The Park case may hold a partial key to the solution if the DFS frees it and lets it back into underwriting.The broader solution however must come from the legislature and from regulators. Inaction in this is a formula for crisis.

One actuarial report on ATIC (S & P) concluded that the company’s provision for reserves to cover unpaid losses and loss adjustments falls more than $500 million short of what he would consider a reasonable level. In a statement of actuarial opinion reported widely in the media the author holds  that  the $190 million provision for unpaid losses and loss-adjustment expenses made by American Transit Insurance Co. is $508.8 million less than the $698 million he considered the minimum necessary.

The author speculated that American Transit’s statutory policyholder surplus would render it insolvent by $430.9 million. While the company reported a surplus of $91.8 million as of March 31, increasing its reserves to the independent actuary’s low point would reduce the level of insolvency to about $417 million.

Yet the Company is alive and at work, despite this dire outlook. Rumors of its demise have been around for some years. Problem is, no one seems to be looking at alternatives with any urgency.

Park Insurance is arguing forcefully that the DFS is effectively removing a major option for affordable insurance coverage and is dismantling its niche industry, it says. According to a statement supplied by Park:

“New York’s van riders – who are overwhelmingly Black, Brown, low-income, and elderly – would need to pay higher rates for alternative service, which they cannot afford. Alternative service options are also far more inaccessible, making times travel longer and, in some cases, impossible. Some in government may dismiss the idea that public transportations are not feasible. We would invite them to spend a day with an 85-year-old NYCHA resident in Southeast Queens who has relied on a low-cost commuter van to pick her up in front of her building to take her to medical appointments, the grocery store, and the pharmacy for the past 20 years.

 “Second, van owners and operators will be forced to close the businesses built from the ground up and terminate the employees who have deep knowledge of the needs of the communities they serve. Given the state has and continues to spend considerable attention and resources to foster Black and Brown employment and strengthen minority-owned businesses, this directly contradicts the previously enacted policies and interests signaled by the government,

 “Third, with no affordable insurance coverage available, some van owners and operators may decide to forego insurance – a crime – and operate illegally, which will, in turn, result in increased enforcement and prosecution on Black and Brown New Yorkers – an area of significant interest to your administration, which has worked hard to reduce both crime and racial disparities in policing in communities of color.

“Fourth, with increased fares and fewer commuter vans operating, it is expected predatory businesses will enter this niche transportation market to displace the existing Black and Brown owners and operators. Similar to how ride-hailing services decimated the largely minorityoperated taxi and black car industry, the lack of affordable insurance coverage will kill another majority-minority sector in transportation.

“The State now has a crisis of its own making by removing the only affordable insurance coverage, one that is causing the above-mentioned multiple harms to Black and Brown van owners, operators, and riders. No viable alternatives are available to replace this massive gap in insurance coverage. Studies have shown that a shift to public transit is not a substitute for van riders, and the possibility of a subsidy to bridge the increase in insurance costs is remote and, even if feasible, will not happen fast enough to prevent the crisis from deepening in communities of color. Public transportation does not operate in the many travel deserts Black and Brown communities live and work in. The whole purpose of this industry is to supplement—not supplant—the existing public transportation network.

“The only solution to stop and reverse the crisis is to ensure that affordable insurance coverage remains available, and that means allowing the sole provider of that coverage, Park Insurance Company (“Park”), to continue to operate in the near term.

“Park is currently on the threshold of being liquidated by DFS’s order. The reason for its pending liquidation is because of its alleged insolvency in 2017, which Park disputes and is currently appealing a court to grant DFS’ order.

“The above suggestions are the only remedies available to possibly prevent the spread of the adverse impacts of DFS’ decision to remove the only affordable insurance coverage, with no consideration of the State’s Black and Brown communities, which rely on commuter vans for affordable transportation to make ends meet.

“These suggestions are critical to turning around the disaster the State has created, and only the State can fix; one that has elected officials and community leaders in Black and Brown neighborhoods outraged at the harms inflicted on their constituents. To date, they are also awaiting the State’s response on how to proceed and view that response in the context of how Black and Brown New Yorkers are protected from harms outside of their control. Unfortunately, DFS has treated us with short shrift throughout our repeated attempts to discuss the immense adverse implications of such shortsighted thinking. I remain optimistic that it is not the Administration’s intent to dismantle a thriving Black and Brown industry with no game plan to fix it, nor do we believe it is the administration’s policy to turn a blind eye to the consequences those actions are causing within those communities, both in terms of jobs and businesses.”

For now, looks like a problem for New Yorkers as the talk starts to taxi around town…and as New Yorkers wonder if their interest will be “picked up”.