Division’s ruling expected on ride-sharing costs

Will car-service apps Uber and Lyft be allowed to operate permanently and unregulated in Rhode Island? At this pace the state may never know.
More than two years after Ocean State lawmakers authorized tighter restrictions on car services and nine months after regulators used that authority to create a $40 per-ride minimum that some suggested would kill “ride-sharing” apps, uncertainty reigns.
Regulators and Uber acknowledge that the $40 minimum, if implemented, would only apply to commercially licensed vehicles, affecting the professional drivers the California software company had initially been working with here, but not amateurs.
And since then, Lyft, which only operates with noncommercial drivers using their personal vehicles, has launched in Providence and declared that the $40 minimum would definitely have no impact on it.
If that’s the case, then it is unclear whether the $40 minimum would achieve its stated goal of protecting regulated taxi cabs from unregulated competition.
At best, it could force the licensed car-service drivers now using Uber to decertify themselves, or hand a competitive advantage to Lyft.
Maybe that’s why the $40 minimum remains on the shelf.
Responding to appeals from several car-service companies and later Uber, the R.I. Division of Public Utilities and Carriers in November suspended the $40 minimum ride rule in order to hear testimony on alternatives. That hearing took place in April, but nothing has emerged from the agency since.
Then in June, state lawmakers created a study committee to examine car-service regulations in the context of new technology and make recommendations on how they should be treated.
The law does not say anything about suspending the $40 minimum ride while the committee meets.
But Uber spokesman Taylor Bennett said he understood that the $40 minimum would remain on ice pending a recommendation by the study committee, which includes a seat for the Division of Public Utilities’ administrator, now Thomas F. Ahern.
Division spokesman Thomas Kogut, however, disputed that the study committee would have any impact on a price-floor ruling.
“They are kind of separate things,” Kogut said. “My understanding is on the legislative side you have a joint resolution to look at a broad range of motor-carrier-for-hire issues and separately you have a division proceeding to look at one pending aspect of rulemaking.” In the meantime, price floor or not, Uber and Lyft have both expanded their service in Rhode Island – stretching down from Providence to Newport and Narragansett.
Insurers, who will be represented on the study committee, have a unique perspective on the car-service battle. The more drivers in business giving rides for hire, the greater the potential for new policies.
However, if technology is used to allow commercial rides without insurance coverage, or with inadequate coverage, that could hurt insurers in both lost business and in potential disputes over claims.
“It is a business model that is growing increasingly popular and we in the insurance industry want to be in a position where we are well-placed to support innovation,” said Frank O’Brien, vice president of state government relations for the Property Casualty Insurers Association of America. But he acknowledged some “unique challenges.”
For insurers, those challenges come from the “ride-sharing” model of car-service apps and highlight the differences between services often lumped together.
Uber’s original “Black” platform connected riders with drivers operating commercial livery services, which have been regulated in some form in Rhode Island for the last decade.
But services such as Uber X, the company’s offering in Providence, does not promise a commercially licensed livery car, although Uber had said it would use licensed cars when it launched.
Traditional livery cars with blue cards have their own insurance policies, but Uber and Lyft cover personal vehicles using their platforms with a blanket policy.
“We get into questions of when does coverage begin and end. And who is responsible for covering what, when?” O’Brien said.
The insurance issue sits on top of broader questions surrounding all forms of car services and how tightly they should be regulated.
At the Division of Public Utilities, Kogut still expects a decision to be handed down in the coming weeks on the $40 minimum, despite passage of the study-committee bill. •

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