Sensible solutions for taxis and ride-hailing services – CY Ming

Deputy Transport Minister Datuk Abdul Aziz Kaprawi said the government will make it compulsory for drivers of ride-hailing services such as Uber and GrabCar to buy commercial insurance just like taxi operators in order to operate legally.

He disclosed that the Land Public Transport Commission (SPAD) is still in the midst of discussions to regulate the industry, which included making it mandatory for Uber and GrabCar vehicles to undergo periodic computerised inspections at Puspakom.

These measures were aimed at legalising the industry and regulating the operators. He said this is to ensure private vehicles are safe for people to ride in, as the number of phone apps will continue to grow.

However, it should be noted that issues surrounding ride-hailing apps and taxis are highly complicated, otherwise they would have been resolved long ago. The matters mentioned by the deputy minister need to be addressed point-by-point.

The term "commercial vehicle" is clear as these vehicles transport goods or passengers for a fee, except for vehicles rented out by car rental companies. They may be commercial vehicles but customers can only drive them for private use.

Aziz stated "commercial insurance", which is rather confusing, as the most common types cover damages to business property, third parties and workers' compensation.

If he meant commercial vehicle insurance, then there are many types.

Under the Motor Tariff for cars alone, they are categorised under Public Taxis (licensed under Teksi Bermeter or Kereta Sewa), Hire Cars – Chauffeur Driven (licensed under Teksi Limousin), and Hire Cars – Hirer Driving (licensed as Kereta Sewa Pandu).

The Motor Tariff has been in use since 1978 and for a long time, the rates were RM69.80, RM102.50 and RM122.10 for every RM1,000 cover for public taxis, limousine taxis and rental cars respectively, compared with RM26 for private vehicles.

Would insurance companies accept public taxi premiums to insure private vehicles used for Uber or GrabCar services when they are collecting much higher premiums for limousine taxis and rental cars?

These limousine taxis and rental cars look exactly like private cars and are used for chauffeur-driven services, just like GrabCar and Uber. Insurers also charge an additional RM78 for limousine taxis and RM240 for rental cars as premiums for "Passenger Risk Cover" for four adults.

Even if vehicles used for Uber and GrabCar services are covered for legal liability to passengers, those injured inside the car may not receive a single sen in compensation.

Very few people are aware that passengers in buses and taxis are not insured at all. The compulsory insurance for all motor vehicles, including buses and taxis, is to insure the driver for legal liability when sued by injured parties.

For example, passengers injured in a taxi through no fault of the driver would have to sue the driver of the other vehicle that crashed into the taxi. The same applies to a GrabCar or Uber vehicle even with "Passenger Risk" cover.

Should the driver of the taxi or private car was at fault and insured for "Passenger Risk", the insurance company could still withdraw the legal liability cover if the driver was found driving under the influence of drugs or alcohol, or violated one of the many clauses included in the terms and conditions of the motor insurance policy.

Also, injured victims would have to wait many years for the court to award compensation and receive payment from the insurance company. Under existing laws, most accident victims suffered a double blow, one for the injury and the other the long agonising wait for compensation.

The legal liability insurance should be replaced with Personal Accident Insurance (PAI) as compensations are speedily paid out without having to establish fault. A RM100,000 cover may not be adequate for the rich or high-income earners but they are likely to have their own life and general insurance.

Together with RM20,000 cover for medical expenses, many injured victims can seek treatment at private hospitals.  

What the Transport Ministry should do is to amend antiquated laws requiring all motor vehicles to be insured for third party injuries, and public service vehicles such as buses and taxis to be covered for legal liability to passengers, be replaced by PAI cover.

And the only way for private cars to provide transport for a fee legally is to amend existing laws.

As all commercial vehicles are under the purview of SPAD under the Prime Minister's Department, the Transport Ministry will have to work with SPAD and not issue statements on its behalf.

SPAD was fully operational on January 31, 2011 and since inception had not added more metered taxi permits in the Klang Valley due to the oversupply. If private cars are allowed to provide transport for a fee, taxi permits should also be granted to any individual that qualifies.

Those choosing to operate taxis may purchase new vehicles with excise duty exemption but pay higher motor insurance premiums and regulated by SPAD. Drivers preferring to offer ride-hailing services using private cars are to pay excise duty and private car insurance, and regulated by phone apps.

In any case, safety is determined by many factors that affect the driver, vehicle, road, weather and traffic conditions, and not by insurance or whether the service is provided by taxi or private car.

Reducing the frequency of vehicle inspection at Puspakom from six months to a year may increase taxi driver's income for a day but at the expense of safety, particularly when taxis are old.

After the initial inspection, the first three routine inspections can be conducted once annually, and after that every six months during the fourth and fifth year. Taxis operating beyond that should be subjected to inspections every three months.

This will encourage operators to change their taxis every three or five years.

The same applies to private vehicles offering ride-hailing services. – February 1, 2016.

* CY Ming reads The Malaysian Insider.

* This is the personal opinion of the writer, organisation or publication and does not necessarily represent the views of The Malaysian Insider.