Governments must find a way to regulate entities like Uber: report

  • Companies such as Airbnb, Uber and TaskRabbit, which epitomize what’s known as the sharing economy, are not going away, so governments must figure out ways to regulate them. And that must happen quickly, before such firms become entrenched in their ways.

    That’s the message in a new report from the Mowat Centre that urges policymakers to recognize that they must step up to protect the public interest, while also ensuring that they don’t destroy innovation.

    “You have a Wild West situation where people are engaging in transactions and the details haven’t been thought out,” said Mowat Centre policy director Sunil Johal, who co-authored the report, Policymaking for the Sharing Economy: Beyond Whack-A-Mole, with colleague Noah Zon.

    “The scale and the speed at which these companies can grow is why in our view they are a new, emerging business model that governments can’t turn away from,” Johal said in an interview.

    Making cash by renting an apartment or doing an odd job has happened for ages. The difference today is that such activities are “at a scale that blurs the boundaries of the personal and the commercial and threatens to disrupt existing markets and regulatory models,” the report says.

    Johal points to the battles Uber has encountered around the world since launching its ride-sharing app, angering taxi firms who complain the giant company isn’t playing by industry rules.

    Uber, which has a valuation estimated at $40 billion (U.S.), insists it’s merely a technology company that helps riders find drivers, and is therefore not subject to traditional taxi licensing rules.

    The City of Toronto views things differently. It has slapped the company with 36 bylaw infractions, and is seeking a court injunction scheduled for May to stop Uber’s operations in the city altogether.

    Toronto mayor John Tory has said that Uber is “here to stay,” so he believes municipalities must find a way to adapt.

    “Uber is operating in Toronto, and it’s in a very murky legal area,” Johal said. “It gives a competitive advantage to those not being regulated in the same strict way.”

    Even if the city is successful in its bid to shut down the company, Uber has operated here since 2012.

    Johal concedes that no jurisdiction has come up with a simple solution to deal with these so-called disruptive companies that offer peer-to-peer service, such as a linking home owner to a house cleaner, or a tourist to a room, or an artisan selling a hand-made item to buyers.

    Some jurisdictions have offered temporary waivers to allow companies to operate while rules are worked out, as Pennsylvania has done with Uber and Lyft.

    Just last week, London introduced legislation that would permit home owners to rent out their homes as long as they did so for fewer than three months. Under existing rules, they could face fines of up to £20,000.

    Johal conceded that governments are notoriously slow when it comes to change, and companies in the sharing economy tend to accelerate at breakneck speed, often ignoring governments or traditional regulators.

    In the report, he noted Ontario’s Innkeepers Act still spells out rules on how and when a hotel owner can place a lien on (and, if necessary, sell) a customer’s horse.

    There are important public policy concerns over short-term home rentals. These include zoning issues, health and safety, and even whether, like hotels, such rentals should be subject to taxes.

    Similarly, websites such as TaskRabbit, a temporary employment agency of sorts, link individuals with those looking for someone to perform certain task. But such firms raise the question whether those hired are employees, and subject to labour law protections.

    In the past, people might have hired a neighbour or friend to do electrical work around the house. Now, with the website, an electrician can easily find jobs to make some extra cash.

    “Theoretically, it’s good for him, and it’s good for someone who needs a little electrical work done,” Johal said. “Home repairs are a small task, but they may have significant health and safety issues. What if he burns down the house?”

    And given the growth in precarious work in a weak economy, Johal said governments should consider whether individuals hired through such sites should receive workplace protection, minimum wage, pension coverage or employment insurance.

    “Short-term casual employment can be great. It’s flexible,” he said. “But what if you have to string together four or five tasks every day, and there’s no employer of record and there’s no safety net if something happened to them?”

    Perhaps, he said, if someone exceeds a certain threshold, such as hours worked in a week, they would be considered an employee. Or Uber drivers who work full-time hours would need to be licensed, while those working a few hours would not face the same rules.

    In the end, he believes governments need to think differently about the sharing economy, noting that the companies that have emerged in the field are just the tip of the iceberg.

    Johal argued that creative governments could harness much of the data these companies collect to public benefit. For example, Uber collects information on where cars are, what routes they take and even where demand is greatest at certain times and locations.

    If governments could trade access to such data for regulatory approval, companies might be interested. Johal argued that data could prove useful in developing transportation or even employment policies.

    “For government, it could be a ‘You scratch my back, I’ll scratch yours,’ ” he said. “It offers certain flexibility, potentially to make smarter public policy decisions. Companies don’t want to give up the data.”

    Similarly, many of these companies require detailed user reviews — so governments could tap into those and target those providers with low scores for inspections, instead of waiting for complaints.

    But Johal said governments need to act quickly to make policies because once companies “are set up and operating, there will be a vested stake in the existing position,” he said He added that it’s important to develop fair and open rules for everybody. “I don’t think we have that right now,” he said.

    And the jurisdictions that get it right, with a balance between innovation and fair competition, would likely be the ones to attract more emerging businesses.

    “It’s not a choice between no rules or old rules. Let’s have good rules,” he said.



TTA Statement on Justice Stinson’s STL decision

Statement by the Toronto Taxi Alliance

On the Ontario Superior Court decision regarding Toronto’s Standard Taxi Licenses

February 16, 2015

The Toronto Taxi Alliance is grateful that ‎the Ontario Superior Court of Justice has recognized the unfairness of the process followed by Toronto City Council on February 19th, 2014.  In imposing an arbitrary mandatory conversion date on Standard Taxicab Licences (STL).

At paragraph 98 of his decision, Justice Stinson wrote, “I therefore conclude that this breach of the notice requirement contained in the Procedural By-Law was substantive and went to the root of the validity of that section of the by-law amendment which provided for a mandatory conversion date. As a result, I find that the 2024 conversion date aspect of the by-law was enacted illegally and should be quashed.”

While Justice Stinson’s decision gives some important relief to holders of STLs, the new bylaw still adversely effects the transferability of STLs particularly for pensioners who will be deprived of the value of their deceased spouse’s STL.

‎The TTA is hopeful that new City Council will amend the bylaw to exempt the holders of STL’s from these unfair and unjust  provisions of the  new bylaw. This will ensure the continuation of prompt and efficient 24-hour taxi service that the hard working owners and drivers of Standard Taxis have provided to the residents of Toronto for so many years.


Private auto insurance for Uber cars? Toronto insurance firm says NO

The text below is a letter received by Toronto taxi owners who inquired as to whether their personal automobile would be covered by their insurance policy if it were operated as an UberX vehicle:

Mainway Hunter Creighton Insurance Inc.
101 Queen Street South, Mississauga ON
L5M 1K7
To: Joel and Judi Barr
January 28 2015
Dear Mr. & Mrs. Barr:
Re: your automotive insurance policy

Further to our conversation, please be advised that the above mentioned auto policy is a private passenger auto policy and will not cover passengers carried for compensation. I must be clear, that if you are using your automobile to carry passengers for compensation, this policy will not respond.

An Insurer may grant permission to carry passengers for compensation, however, permission will vary on a case by case basis and would need to be approved by the individual insurance company. If such permission is granted, than additional endorsements will need to be applied to the policy.

Additionally, a change in policy from a private passenger auto to a commercial auto policy may be required. Thank you for this opportunity to be of service. Please contact me if you have any questions.


Kindest regards,

Christa Cromwell, R.I.B. (ONT)
Personal Lines Account Manager

Insurance Bureau raises concerns about extent of Uber coverage


By: City Hall Bureau, Published on Wed Feb 04 2015

While Uber Canada assures the public it aims to offer the safest ride on Toronto’s roads, the country’s insurance lobby fears the company might not provide adequate insurance protection.

“It’s like Santa Claus — you hope it exists but you’re kind of skeptical,” said Pete Karageorgos, director of consumer and industry relations for the Insurance Bureau of Canada.

The insurance bureau’s concern revolves around personal and commercial insurance.

Licensed Toronto taxis need commercial insurance, a more comprehensive and costly form of coverage than the personal insurance carried by most drivers. The bureau says it’s unclear whether UberX drivers — those who use their own cars to pick up fare-paying customers for rides arranged through the company’s smart phone app — are required to have commercial insurance.

What Uber Canada will say is this: If an accident occurs during an UberX trip, Canadians can “rest assured” passengers, pedestrians and other motorists are “well covered” by commercial auto insurance in addition to any insurance coverage maintained by the driver, Uber Canada spokesman Xavier Van Chau wrote in email.

“We are confident our insurance model will provide coverage as it does in every jurisdiction where we operate.”

Van Chau’s email said Uber’s insurance policy is “proprietary” and therefore not public. He did not respond to the Star’s request to clarify if it is Uber’s policy that drivers have commercial insurance.

But he said every UberX ride is backed by $5 million of contingent auto liability insurance covering bodily injury and property damage.

The coverage is “far greater” than standard requirements for taxi and limo insurance in Canada and is underwritten by insurance company A.M. Best, he wrote.

Karageorgos said Uber’s response to questions about its insurance policies is filled with “holes.”

If indeed an UberX driver gets into an accident and does have a commercial insurance policy, “then there’s no problem, it’s like being in a regular cab. But if they’re operating their vehicle as a cab and it’s not insured the way it should be, then there’s likely going to be some challenges.”

Uber declined to say how many Torontonians are working for them. The company’s website invites drivers interested in earning extra cash to apply for an UberX position if they have a mid-size or full-size four-door vehicle, in excellent condition. Applicants must be “at least 21 years old and possess a personal license and personal auto insurance.” The website also stipulates Uber “does not provide transportation or logistics services or function as a transportation carrier.”

Toronto taxis are required to have commercial coverage and carry a minimum of $2 million in liability insurance. An owner or driver has 10 days to notify the city if there is any change to the policy.

The city cited inadequate insurance that “might not provide essential coverage to drivers, passengers and others in the event of accidents,” as one of the reasons it is seeking an injunction for Uber to stop its operations here. A court date is scheduled for May.

Karageorgos said the way things stand he would choose a licensed cab over an UberX vehicle.

“Because of how they’re regulated through the municipality, there are some checks and balances in place that make me feel more comfortable,” he says.

If an accident happens and the driver isn’t properly insured, “I can go after the taxi company or the municipality that oversees them so there are other steps I can pursue.”

As Uber spreads into Canada, it has hit other bumps in the road.

Two UberX drivers in Montreal had their cars impounded by police in recent weeks.

“They do have their cars now,” said Jean-Nicolas Guillemette, general manager of Uber Montreal. “We will always help our partners, financially, psychologically.”

Guillemette said the seizures came at the request of the Montreal Taxi Bureau, the city agency that oversees the taxi industry. He declined to say what fees or fines the drivers faced, referring calls to Montreal city officials.

“We have had tens of thousands of rides since we started operating in October 2014, and we have only had two cars seized. I don’t see it as a threat for drivers,” Guillemette said.

Calls to the city of Montreal were referred to the Montreal Taxi Bureau, which did not return calls.

Tammy Robbinson, a spokeswoman for the city of Toronto, said the city does not have the power to impound cars for licensing bylaw infractions.

In December, two MPPs introduced separate private member’s bills to revamp the Highway Traffic Act and stiffen penalties for those operating illegal taxis.

Liberal MPP John Fraser said he introduced the legislation due to an issue with illegal taxis in his hometown of Ottawa. His bill calls for tougher penalties including fines of up to $30,000, demerit points and vehicle impoundment after a second offence.

“This bill is not about Uber,” Fraser said, noting it happened to coincide with Uber’s arrival in Ottawa. “The message of the bill is that public safety is paramount.”

He added that new technology is a new reality. “If you are driving people for hire then there are certain rules that have to be followed,” Fraser added.