Independent Insurance Agents and Brokers of Arizona, Inc.



Similar documents
California Department of Insurance Investigatory Hearing Background White Paper

CONFERENCE COMMITTEE REPORT BRIEF HOUSE SUBSTITUTE FOR SENATE BILL NO. 117

Transportation Network Companies: Insurance Industry Advocacy Toolkit

Supplemental Handout TNC Insurance Compromise Model Bill Updated March 26

Technical Advisory. TA 314 August 11, 2014

Transportation Network Companies: Insurance Coverage Challenges and Implications

TNC Insurance Compromise Model Bill March 24, 2015 v2

Networks (Commercial Ride Share)

LEGISLATURE OF THE STATE OF IDAHO Sixty-third Legislature First Regular Session IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO.

Friday, March p.m. State Capitol, Room 112, Sacramento Live webcast at

How To Get A Ride Sharing Network License In Paupa

BILL AS INTRODUCED H Page 1 of 11. Statement of purpose of bill as introduced: This bill proposes to enact specific

2015 Legislative Session Highlights. Jesse Laslovich, Chief Legal Counsel Nick Mazanec, Attorney

Transportation Network Companies

How To Write New Rules For Auto Insurance In New Jersey

Order Instituting Rulemaking on Regulations Relating to Passenger Carriers, Ridesharing, and New Online-Enabled Transportation Services.

Be it enacted by the People of the State of Illinois,

AN ACT REGULATING TRANSPORTATION NETWORK COMPANIES.

TRANSPORTATION NETWORK COMPANIES S.B. 184: SUMMARY OF INTRODUCED BILL IN COMMITTEE

Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.

House Substitute for SENATE BILL No. 117

Disclosure Requirements for a Named Driver Under Insurance Code 1952

Property and Casualty Review Standards Checklist

FREQUENTLY ASKED QUESTIONS

NATIONAL CONFERENCE OF INSURANCE LEGISLATORS (NCOIL)

Transportation Network Company Legislative Issue Status April 13, 2015 Update

15 LC A BILL TO BE ENTITLED AN ACT BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

NATIONAL CONFERENCE OF INSURANCE LEGISLATORS (NCOIL)

A BILL FOR AN ACT BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: 2 adding a new chapter to be appropriately designated and to read

Authorized By: Holly C. Bakke, Commissioner, Department of Banking and Insurance

Ohio Legislative Service Commission

Proposed Ordinance Changes to allow for Transportation Network Company Operation in the City of Des Moines. Council Workshop December 8, 2014

Part-Time Uber Partner-Drivers Are Fundamentally Different From Existing Taxi Operations

15 HB 190/AP A BILL TO BE ENTITLED AN ACT BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

HOUSE BILL 972. C4, C5 5lr2368 A BILL ENTITLED. Insurance Transportation Network Insurance Requirements and Coverage

Sixty-fourth Legislative Assembly of North Dakota In Regular Session Commencing Tuesday, January 6, 2015

Overview of Ride-sharing Regulations and Insurance Southeastern Regulators Association Brad Nail, Insurance Policy Manager, Uber.

COMMENTS ON PROPOSED MODIFICATION TO DECISION from former San Francisco Mayor Willie L. Brown Jr.

The Sharing Economy and Transportation Network Companies Katie School/CPCU Spring Symposium April 16, 2015 Marriott Hotel, Normal, IL

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ) ) ) ) )

Proposed Amendments: N.J.A.C. 11:3-1.1, 1.2, 1.4, 1.6, 1.7, 1.8, and 1.9

South Carolina Department of Insurance 300 Arbor Lake Drive, Suite 1200 Columbia, South Carolina 29223

UNINSURED AND UNDERINSURED MOTORIST COVERAGE - HISTORY

domicile, including but not limited to Personal Injury Protection (PIP) and Personal Property insurance (PPI), must be carried.

By Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA CPIW Vice President of Technical Affairs

Commissioner Catherine Sandoval California Public Utilities Commission

HOUSE REPUBLICAN STAFF ANALYSIS

"Insurance Services Office, Inc. Copyright"

CHAPTER 18 GENERAL INSURANCE

F I L E D :59 PM

BULLETIN 96-7 FREQUENT PROBLEMS FOUND IN FILINGS

INSURANCE REQUIREMENTS FOR MASTER AGREEMENT CONTRACTORS

Schedule Q (Revised 1/5/15)

PROPERTY AND CASUALTY REVIEW STANDARDS CHECKLIST

ENROLLED HOUSE BILL No. 4455

LOUISIANA DEPARTMENT OF INSURANCE

Insurance Requirements Professional Services

Transportation Network Company Insurance Principles for Legislators and Regulators

Car-Sharing and Ride-Booking

CONFERENCE COMMITTEE REPORT BRIEF HOUSE BILL NO. 2352

CONFERENCE COMMITTEE REPORT BRIEF HOUSE BILL NO. 2446

NO. 49,958-CA COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA * * * * * * Versus * * * * * *

The Liability of Lessors and the Insurance Implications of Bill 35

The Maryland Automobile Insurance Fund and the Private Insurance Market

Section Mandatory provisions.

AN ORDINANCE TO RECOGNIZE TRANSPORTATION NETWORK

STATE OF NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE

Assembly Bill No. 175 Committee on Transportation

COMMERCIAL VEHICLE CERTIFICATE AND INSURANCE REGULATION

INTERPRETATION BULLETIN

Using Independent Contractors: A Guide to IRS and Insurance Guidelines

COMMERCIAL UMBRELLA. 1.1 The underlying business insurance must be insured with Mt Morris.

SENATE STAFF ANALYSIS AND ECONOMIC IMPACT STATEMENT. This bill substantially amends the following section of the Florida Statutes:

IS SELF-INSURANCE REALLY INSURANCE? UM AND PIP COVERAGE OBLIGATIONS FOR SELF-INSURERS

Illinois Official Reports

Certificates of Insurance Forms & News

SB 1567 End of Named Driver Policies? R. Brent Cooper Wes Johnson Cooper & Scully, P.C. August 21, 2013

INSURANCE DEPARTMENT ALL COMPANIES LICENSED TO WRITE PROPERTY AND CASUALTY INSURANCE

Transportation Network Companies (TNCs)

ORDINANCE NO. AN ORDINANCE AMENDING CITY CODE CHAPTER 13-2 RELATING TO TRANSPORTATION NETWORK COMPANIES (TNCs)

64th Legislature AN ACT INCREASING MOTOR VEHICLE LIABILITY INSURANCE MINIMUM REQUIREMENTS FOR

SOUTH CAROLINA OFFER OF ADDITIONAL UNINSURED MOTORISTS COVERAGE AND OPTIONAL UNDERINSURED MOTORISTS COVERAGE

BOARD REPORT. Contractor Liability Insurance Policy A-31 Amendment

Fleet Management Policy Table of Contents

NOTE: SERVICE AGREEMENTS WILL BE DRAFTED BY RISK SERVICES SERVICE AGREEMENT

HB 3588 FEASIBILITY STUDY OF AN INTERFACE MOTOR VEHICLE FINANCIAL RESPONSIBILITY VERIFICATION SYSTEM

Kentucky Transportation Cabinet Department of Vehicle Regulation Division of Motor Carriers Transportation Network Company Authority Application

First Regular Session Sixty-ninth General Assembly STATE OF COLORADO INTRODUCED SENATE SPONSORSHIP

STATE OF OKLAHOMA. 2nd Session of the 49th Legislature (2004) AS INTRODUCED

MARYLAND LAWS AND REGULATIONS ON INSURANCE PREMIUM

How To Get A Car Insurance Policy From Nevada General Insurance Company

r Commercial Auto & The Dreaded Rental Car Issue!

****************************************************** The officially released date that appears near the beginning of each opinion is the date the

Ride-Sharing and the Consequences to Insurance. Shaun Cawley

Trends and Developments In Legislative and Regulatory Activity

WASHINGTON UNDERINSURED MOTORISTS COVERAGE SELECTION/REJECTION

TOI: 19.0 Personal Auto Sub-TOI: Private Passenger Auto (PPA)

2009 WI APP 51 COURT OF APPEALS OF WISCONSIN PUBLISHED OPINION

STATE OF CONNECTICUT

Automobile Insurance Reporting Requirements and Filing Deadlines. Proposed Amendments: N.J.A.C. 11:3-3.5, and 22.3

Transcription:

Independent Insurance Agents and Brokers of Arizona, Inc. 333 East Flower Street - Phoenix, Arizona 85012 Phone: (602) 956-1851 / (800) 627-3356 Fax: (602) 468-1392 Web: www.iiabaz.com Email: info@iiabaz.com Copyright 2015: IIABAZ All rights reserved. May not be reproduced without written permission of IIABAZ. Bulletin # 11 DATE: April 2015 TO: IIAB of Arizona Members IIAB of Arizona Associate Members FROM: Lanny L. Hair, CIC, RPLU, ARM, AAI Executive Vice President RE: Legislative Briefing on House Bill 2135 Transportation Network Companies The Arizona State Legislature adjourned Sine Die on April 3, 2015 after only 81 days of action, bringing an end to the shortest legislative session in nearly 50 years. While brief, members of the 52 nd Legislature had plenty of work to keep them busy including several bills that impacted the insurance industry. The IIABAZ will release a detailed 2015 Legislative Wrap-Up this summer. However, we wanted to apprise our members of one bill in particular that is garnering a great deal of attention within our industry: H2135: Transportation Network Companies Transportation Network Companies ( TNCs ) such as Uber, Lyft, and several other ridesharing platforms all refer to a system similar to that of a taxi service. However, it is a system that the TNCs argue is NOT a taxi company; rather, it is a software system that connects individuals who want to utilize their personal vehicle to provide rides to private individuals. Most TNCs just provide the software system to connect the drivers and riders - there is not just one standard model. Unlike a taxi, TNCs do not provide drivers with a vehicle to be used for commercial purposes; the contract is instead between the driver and the passenger, where the driver provides for all costs associated with the vehicle. There are several TNCs available to passengers, but the most dominant one is Uber. In less than five years time, Uber has grown from an unknown entity to a multibillion dollar company, which has enabled them to invest an enormous amount of time and money for the retention of the lobbying services needed to obtain favorable TNC regulations. Across the board, taxis argue that many of the new TNC laws have resulted in an unbalanced and anti-competitive driver-for-hire market. Unlike TNCs, taxis have a litany of rules and regulations to comply with, ranging from mandated insurance coverages to vehicle inspections and background checks. It is important to note, however, that while TNCs do indeed lack any regulatory framework in most jurisdictions, they are pursuing similar regulations for themselves nationwide. With regard to the insurance requirements on TNCs in Arizona, the Legislature has opted to

adopt the model legislation that we are seeing implemented in several other states. It is important to note, however, that while the model TNC language is being advanced in multiple states there are MANY differing ways TNCs are actually being legislated in other states and cities. Thanks to lengthy and oftentimes contentious debate, each state has amended the model legislation to reflect their stakeholder agreements, which has resulted in a patchwork of laws state-by-state. In Arizona, the specific issue that perpetuated the debate between insurance and TNCs throughout the Session was which insurance company is going to provide coverage in the event of an accident? The debate focused primarily on both the Legislature s definition of a transportation network trip and which coverage applies during the time that a TNC driver is logged onto the TNC application but has not yet accepted a ride. Under HB 2135, the Legislature, TNCs, regulators, insurance companies, and the taxi/livery industry consider the following coverage periods while TNC drivers are engaged in a TNC trip: Period Zero (logged off): Driver is not logged onto the TNC application. Period One: Driver is logged onto the TNC application, but has not accepted a trip. Period Two: Driver has accepted a trip and is in route to pick up the TNC passenger. Period Three: TNC passenger is in vehicle and is being transported to their destination. Period three ends when the TNC driver ends the trip by indicating through the TNC platform that the passenger has been dropped off. Please note that there is a single-page coverage explanation attached to this bulletin that explains which coverages apply during each of the aforementioned periods. This document also explains how the Legislature determined when the TNC s insurance policy should provide coverage versus when the driver s personal auto policy should provide coverage. As many private passenger auto policies exclude coverage when vehicles are used for livery service, it is necessary for the TNCs to provide coverage while there are passengers in the vehicle. Even in the event of an accident where there are no passengers in the TNC vehicle, if the vehicle was being used for livery services the personal auto policy typically does not provide coverage. The number of insurance companies willing to issue a rideshare endorsement has been increasing monthly. Many insurance companies have already indicated their willingness to issue an optional endorsement to the personal auto policy to modify the livery exclusion to provide coverage while a vehicle is being utilized for TNC services but NOT while the vehicle is occupied by a passenger (Period One). In some instances the TNCs are negotiating commercial taxi policies that will provide coverage for their drivers vehicles in their master umbrella policy, but most negotiations end with the TNC only willing to provide coverage when the driver of the vehicle is logged on. TNC insurance companies have primary coverage during Periods Two and Three, or when there is a passenger in the vehicle, or once the driver has accepted a trip and is in route to pick up the passenger. Keep in mind, no two TNCs operate under the same contract, so it is up to the vehicle driver to understand when the TNC master umbrella policy does and does not cover their TNC activity. (EXAMPLE Does the TNC policy cover liability only or does it also include physical damage?) Under HB 2135, the TNC must provide this specific coverage information to all drivers before

allowing them to operate as a TNC driver. Also included with this briefing is the Arizona Department of Insurance Regulatory Bulletin (2015-04 INSURING TRANSPORTATION NETWORK COMPANY DRIVERS), which explains the regulatory changes that are now needed in the personal auto non-cancellation and non-renewal rules. The change is a procedural step that must occur in order to move forward on offering coverage plans that seek to combine a commercial risk policy (taxi-type service) with a personal auto policy. This statutory change was necessary because some stakeholders contended that the mere usage of a vehicle for TNC services could be used as adequate cause for the insurer to cancel the driver s personal auto policy. For this reason, one of the provisions within HB 2135 clarifies that an insurer cannot cancel a personal auto policy if the vehicle is utilized as a TNC vehicle and coverage for such activity is provided by another policy. Prior to this legislation, the required limits of liability for taxis and other livery vehicles were the same if the vehicle did or did not house a passenger. The legislation lowers those limits for all driver-forhire services when there are no passengers in the vehicle and raises limits when the TNC is in route or when there is a passenger in the vehicle. (PLEASE SEE THE ONE PAGE COVERAGE EXPLANATION FOR REQUIRED LIMITS.) Once an agreement was reached by all stakeholders on the bill, the technical aspect of the language became a time-consuming difficulty that resulted in daily changes all the way up until the last day of Session. As passed by the legislature on Sine Die, the majority of HB 2135 becomes effective on July 3, 2015, with the new insurance provisions going into effect on March 1, 2016. From July 3, 2015 to February 29, 2016, an insurer may not cancel or non-renew a personal auto policy that has been in effect for 60 days or more solely because the named insured uses a vehicle for TNC purposes. Effective March 1, 2016, a personal auto policy that has been in effect for 60 days or more may be subject to cancellation or non-renewal if the named insured does not maintain coverage for TNC use. The IIABAZ will be issuing another Bulletin in the near future to help members explain to their current and new TNC driver clients their options under this new legislation. Enclosed you will find: [1] One-page explanation of when coverages are provided by the personal auto policy and when coverages are provided by the TNC Ride Share Master Policy. This coverage explanation was provided by Veridus, LLC. [2] Arizona Department of Insurance Regulatory Bulletin 2015-4 INSURING TRANSPORTATION NETWORK COMPANY DRIVERS This publication is intended to provide accurate and authoritative information on the subject matter covered and is distributed with the understanding that neither Independent Insurance Agents and Brokers of Arizona, nor any contributing author or publisher is rendering legal, accounting, or other professional services and assume no liability whatsoever in connection with its use.

TNC Insurance Coverage Explained AVAILABLE BUT NOT ON TRIP (PERIOD ONE) DURING TRIP (PERIOD TWO & THREE) APP OFF ACCEPT TRIP DRIVER S PERSONAL AUTO INSURANCE BEGINNING MARCH 1, 2016, TNC OR TNC DRIVER MUST PROVIDE THE FOLLOWING PRIMARY COVERAGE* TNC OR TNC DRIVER MUST PROVIDE THE FOLLOWING PRIMARY COVERAGE $25K BODILY INJURY $50K BODILY INJURY $20K PROPERTY DAMAGE $250K LIABILITY COVERAGE PER INCIDENT $250K UNINSURED MOTORIST COVERAGE, PER INCIDENT LOGGED ON AND AVAILABLE ACCEPTS TRIP ENDS TRIP *BEFORE MARCH 1, 2016, TNC IS REQUIRED TO PROVIDE COVERAGE ON THE ABOVE AMOUNTS IN PERIOD ONE AS A CONTINGENT LIABILITY POLICY TO THE TNC DRIVER S PRIMARY PERSONAL INSURANCE POLICY.

Office of the Director Arizona Department of Insurance 2910 North 44 th Street, Suite 210, Phoenix, Arizona 85018-7269 Phone: (602) 364-3100 Web: https://insurance.az.gov Douglas A. Ducey, Governor Germaine L. Marks, Director REGULATORY BULLETIN 2015-04 1 To: From: Insurance Rating Organizations Insurance Industry Representatives; Insurance Trade Associations; Property & Casualty Insurers; and, Other Interested Parties. Germaine L. Marks Director Date: April 27, 2015 Re: Insuring Transportation Network Company Drivers The Arizona Legislature passed HB 2135 (Laws 2015, Chapter 235) that establishes insurance and regulatory requirements for transportation network companies and their drivers. The legislation is effective from and after July 3, 2015. The purpose of this Regulatory Bulletin is to provide guidance to insurers that wish to file products with the Arizona Department of Insurance ( ADOI ) to provide coverage for individuals operating a transportation network company vehicle. Background A Transportation Network Company ( TNC ) is a technology-based business that utilizes a digital platform (like a mobile phone application) to match TNC drivers to potential passengers. For a fee paid by a passenger through the application, the transportation network driver transports the connected passenger with either the driver s personal automobile or a TNC-owned vehicle. Pursuant to ARS 20-1631, a driver under a personal motor vehicle insurance policy may be subject to cancellation of the policy if the covered vehicle is used for commercial purposes. A TNC driver operating a vehicle insured by a personal motor vehicle policy for TNC purposes (commercial) might be in breach of the terms of the insured s personal motor vehicle policy if the driver does not carry coverage for the commercial purpose (TNC). Current law does not permit the ADOI to approve a motor vehicle policy or any motor vehicle policy endorsement, amendment, or rider that has noncompliant or conflicting coverages. For example, ADOI could not approve a personal motor vehicle insurance policy filing that also offers coverage for commercial risks. Therefore, if an insurer filed a personal motor vehicle insurance 1 This Substantive Policy Statement is advisory only. A Substantive Policy Statement does not include internal procedural documents that only affect the internal procedures of the Agency, and does not impose additional requirements or penalties on regulated parties or include confidential information or rules made in accordance with the Arizona Administrative Procedure Act. If you believe that this Substantive Policy Statement does impose additional requirements or penalties on regulated parties you may petition the agency under Arizona Revised Statutes Section 41-1033 for a review of the Statement.

policy or endorsement, amendment, or rider to the policy that covers TNC use the ADOI could not approve it. HB 2135 s changes to Arizona insurance law Among its numerous provisions, HB 2135 amends ARS 20-1631 to permit insurers to offer coverage for TNC services under a personal motor vehicle insurance policy. Specifically, the legislation creates a commercial use exemption for TNC purposes under ARS 20-1631(D)(6). The exemption states that an insurer may not cancel or nonrenew a personal motor vehicle insurance policy that has been in effect for 60 or more days if the named insured has either: 1. Procured a TNC endorsement to a private passenger policy; or 2. TNC coverage is expressly provided for by a motor vehicle liability insurance policy issued by another insurer. From and after July 3, 2015 and on or before February 29, 2016, an insurer may not cancel or nonrenew a personal motor vehicle insurance policy that has been in effect for 60 or more days, solely because the named insured uses the vehicle for TNC purposes. On and after March 1, 2016, a personal motor vehicle insurance policy that has been in effect for 60 or more days may be subject to cancellation or nonrenewal if the named insured does not maintain coverage for TNC use. Further, HB 2135 adds ARS 20-1631(N) to permit an insurer to issue an endorsement to a private passenger policy that expressly provides coverage for TNC services. The bill specifies that the coverage by endorsement may not be treated as basic coverage [defined by ARS 20-1631(K)] and termination of the endorsement is not considered a modification of the basic coverage. An insurer that terminates a TNC endorsement issued to an insured must provide notice to the named insured at least 45 days prior to the termination and include an explanation that continued TNC services without appropriate coverage may subject the insured to cancellation or nonrenewal of the insured s private passenger motor vehicle insurance policy. Finally, the legislation includes language [ARS 20-1631(O)] that an insurer is not obligated to offer, provide or issue coverage for any liability incurred while a TNC driver is logged in to a TNC s digital network or software application to be a driver or is providing TNC services. Insurer Guidelines for Filing TNC Products ADOI anticipates that private passenger auto insurers, and Insurance Services Office ( ISO ), will file amendments to Arizona motor vehicle insurance policies or the Arizona Amendatory Endorsement to address the cancellation law changes. Insurers may also file an endorsement to an Arizona motor vehicle insurance policy that expressly provides coverage for TNC services. In order to expedite the review of TNC-related filings, insurers are urged to: Carefully review and follow the new Submission Requirements for Private Passenger Auto (Sub-TOI 19.0001) Form filings in SERFF. Include in the filing only those forms that are being amended to address changes related to TNC exposures and those which HB 2135 necessitates. Make as few TNC-related filings as possible by including as many forms in a single filing as possible. These filings include, but are not limited to, the Arizona Amendatory Endorsement or Policy Application, Declaration Page, and, if applicable, the TNC Endorsement. 2

Ensure that the TNC endorsement or policy form filings include an effective date that is either on July 3, 2015, or a specified date after July 3, 2015. Ensure that the changes to cancellation provisions in forms include an effective date of March 1, 2016. Ensure that filings comply with all applicable Arizona insurance laws and regulations and HB 2135 (Laws 2015, Chapter 235). Please direct any questions regarding form and rate filings to Rosemary Cutter, Senior Insurance Analyst (P/C Section, Rate & Form Division), rcutter@azinsurance.gov or (602) 364-3453 x3459. 3