Governor says move seeks to embrace transportation innovation and strengthen public safety
Governor Charlie Baker has filed legislation to institute a new statewide regulatory framework for TNC’s or Transportation Network Companies. The legislation, entitled “An Act Establishing Department of Public Utilities (DPU) Oversight of Transportation Network Companies” would seek to regulate newly formed companies such as Uber, Lyft, and Sidecar while outlining the industry and consumer safety standards needed as well as to clarify the confusion over potential insurance gaps.
“Massachusetts has always been at the forefront of emerging technologies, with this legislation providing a modern regulatory framework to embrace innovation and protect and serve consumers,” said Governor Baker. “A diverse transportation network is key to our future economic growth and our collaboration will ensure customers have safe and reliable choices when they travel.”
According to the Governor’s office, the legislation was developed in consultation with municipal leaders, company representatives and public safety advocates, including Boston Mayor Marty Walsh who had this to say about the proposed legislation.
“I thank the Baker Administration for taking a step forward in creating regulatory frameworks that incorporate transportation network companies into our existing for-hire transportation ecosystem,” said Boston Mayor Martin J. Walsh. “Over the past year, our Taxi Advisory Commission has closely studied the issues around creating diverse options for our consumers while maintaining the highest level of public safety. I look forward to the legislative process and am hopeful that we can move forward with regulations that place the safety of Boston’s residents and visitors first.”
Specifics on the new legislation filed
The following is a list of the key components of the legislation as outlined by Governor Baker’s office:
- Modern Regulatory System: The Department of Public Utilities (DPU) will have the authority to develop and enforce a modern regulatory framework for TNC’s, allowing for collaboration between the state and municipalities and Uber, Lyft, Sidecar and other companies to support innovation and offer TNC services to Massachusetts residents and visitors under clear and safe guidelines.
- Public Safety: In order to operate and carry passengers for hire, TNC drivers would be required to have a full state Criminal Offender Record Information (CORI) background check, with DPU developing disqualifying offenses in coordination with the Executive Office of Public Safety and Security (EOPSS). TNCs will also be responsible for vetting drivers through commercial, nationwide databases, keeping driver rosters updated and displaying clear external indicators on vehicles when operating as a TNC. The legislation also authorizes local law enforcement to run full CORI checks for livery drivers, creating the strongest state-level public safety checks in the nation.
- Closing Insurance Gaps: The legislation seeks to clarify the current confusion around potential gaps in insurance for members of the public when traveling in a TNC vehicle. Massachusetts would be the first state to adopt standards negotiated in cooperation between insurers and TNCs, guaranteeing TNC vehicles will have $1 million in minimum coverage as soon as a ride request is accepted.
- Municipal Partnerships: The legislation would establish a municipal advisory group that includes the cities of Boston, Cambridge and Somerville to represent the interests of cities and towns in DPU’s work to establish public safety regulations.
- Phase-In Period: The legislation allows for a phase-in of the law to ensure current operations are not disrupted as the framework and regulations are developed and finalized.
This legislation follows Governor Baker’s direction to the DPU in February outlining a six-month transitional period for TNC operators allowing them to operate with private registration and insurance.
What the Massachusetts insurance industry has to say about the new legislation
While it is still early days for the proposed legislation, Massachusetts Insurance Federation’s Executive Director John Murphy says it is a step in the right direction as far as his association is concerned. “I’ll be reviewing the legislation more closely with my members but my initial reaction is positive,” said Murphy.
“Legislation is definitely needed in this area so that the TNC’s and their drivers have a clear understanding of what coverage is needed to protect them and their passengers. The Governor’s bill seems to address many of the key insurance issues and will help prevent unnecessary litigation down the road. We look forward to working on this measure as it moves through the Legislature.”
As for the MAIA, while President & CEO Frank Mancini has not actually seen the Governor’s proposed legislation or regulations as of yet, he notes that the MAIA is more concerned with whether or not TNCs have the proper insurance requirements. “First of all, we [the MAIA] are not taking any position on TNCs and whether they should be regulated or how they should be regulated,” Mancini emphasized, ” That’s not our fight.” Rather, the MAIA is more concerned about whether or not TNCs have the proper insurance requirements, he noted.
According to Mancini, regulations first proposed at the end of the Patrick Administration only included a cursory provision stating that TNCs had to carry adequate insurance. This provision, however, never clearly defined what it meant by “adequate insurance.” As such, Mancini would like any new provisions to be clear on what type of insurance TNCs need in order to legally operate. “We want to make sure that whatever regulation or legislation passes that it has a provision in it that the drivers have insurance that will protect them as well as the passengers they carry as well as for any pedestrians they might become involved in accidents with.”
The problem right now, continued Mancini, is that the only proper insurance for TNCs currently is a commercial, taxi-limousine policy. “Once they turn on an app and begin to work for the TNCs, …it becomes a commercial vehicle,” he explained. “What we are hearing from our agencies is that when drivers come in to talk to agents about coverage and agent tells them how much a commercial policy costs, they [these drivers] walk out,” he added. The result is that many of these drivers are driving around on their private passenger automobile insurance policies which essentially do not cover them when they work for a Uber or Lyft.
As such, Mancini and the MAIA think whatever the Governor’s new legislation proposes it is vital to address the issue of proper insurance for both TNCs, their drivers, and the passengers they carry so that these drivers do not continue to drive around without the proper insurance coverage.