A poorly regulated online taxi-sharing industry that resulted in increased exposure was behind Malta’s insurance companies almost tripling their annual fee to €2,500, sources have told Lovin Malta.
Last March, insurance companies came together to raise all fees on all ‘Y’ number plates, which consist of all passenger carrier vehicles like taxis, vans, or coaches. The fee tripled from €800 to €2500 for some.
The issue, however, only started to rear its head over the past month when a large number of drivers went to renew their insurance.
Sources within the industry explained to Lovin Malta how insurance companies were forced to step in after years of timid enforcement by authorities.
It appears that the increase has stemmed out of growing exposure in poorly regulated taxi-sharing platforms, which are companies that match passengers with vehicles, unlike normal taxi services which have their own fleet at their disposal.
This issue has been identified by the state, with the Ministry yesterday announcing that taxi industry is set for reform once again due to the rise of online platforms.
There two types of legislated taxi services in Malta, white taxis and all other chauffeur-driven services. Both face different regulations, namely that white taxis are allowed to remain on the road when they are not carrying passengers, while other vehicles must return to a public service garage.
A public service garage is any garage over 25 square metres that is licensed to hold vehicles for hire. However, through the new platforms, people are often using public service garages to be used as taxis without any links to that garages.
Within the current legislation, any taxi has to be driven by the owner of the garage or by someone employed by him or her.
For example, a public service garage could have 10 vehicles registered, and simply lease out those 10 cars to any number of drivers who are not employed with the garage.
In fact, since the start of 2017, the number of registered chauffeur-driven cars has almost doubled.
In the preceding years, the number of ‘garage hire’ passenger cars only increased by roughly 100 per year. However, in just two years the number has increased by 1,000.
Such abuse presents a safety issue with regard to culpability. If such a taxi is involved in an accident, who is responsible, the driver or the public service garage owner?
This, sources explained, is what spurred insurance companies into action, after identifying growing exposure in the sector.
The taxi-sharing sector is also open to fiscal issues. The platform means that drivers do not get paid a traditional wage, but are given a commission of what they earn for the parent service.
Sources explained that this means that while they are able to afford more competitive prices, drivers who operate in a less regulated industry often claim less than €20,000, and are thus VAT exempt, something which in not credible for someone working within the industry.
Lovin Malta has sent questions to the Malta Insurance Association and is awaiting their reply.