Minding the Gap Transportation Network Companies Thursday, September 10, 2015 9:00 a.m. – 10:00 a.m.

Presenters Moderator: Shannon Kelly, Farmers Hawaii Robert Nash, State Farm Christian Rataj, NAMIC Mark Sektnan, PCI Cinda Smith, GEICO

TNC Compromise Model How we got here Requires that all TNCs and their drivers have auto insurance policies that recognize that the driver is driving for a TNC Expressly permits personal auto policies to exclude coverage for TNC related driving and states that insurers that exclude coverage will have no duty to indemnify or defend No restrictions on underwriting or rating of personal auto polices Allows a personal auto insurer to offer TNC coverage via an endorsement or separate policy Like to walk you through the elements of the compromise modem, just about the same as the essential elemments PCI develop a year before.

TNC Compromise Model Period 1: Driver is logged in as available, but has not yet accepted a ride request; Primary liability coverage of 50/100/25 State mandated coverages (e.g., UM or PIP) Does not include comprehensive or collision Period 2: Driver has accepted a ride request and/or while the fare paying passenger is in the vehicle, defined as “Prearranged Ride” Primary liability insurance of $1 million

TNC Compromise Model Purchased by the TNC driver, by the TNC itself, or a combination of both. The primary TNC coverage shall not be dependent upon a personal auto policy denying a claim before coverage is triggered TNC drivers will be required to carry proof of TNC insurance coverage and, after an accident, TNC drivers must disclose whether they were logged into the TNC system TNCs must disclose to their drivers the coverage they provide and that their personal auto policy may not provide any coverage for TNC related driving TNCs and insurers will be compelled to cooperate in coverage investigations Insurers will have a statutory right to subrogate against TNCs for claims insurers may have erroneously paid

Model Provides for State Specific Provisions “Reference by Statute all other state mandated coverages for motor vehicles by state financial responsibility law.”

Implementing the Compromise Unringing the bell isn’t easy UT: passed bill with comp and collision required KS: First bill vetoed by Governor. Uber left state; new bill based on compromise IL: Uber’s bill with Period 1 gap now law NV: Compromise with higher liability limits WI: Compromise with preemption language

Other Players Get Involved Enterprise Exemption – Shared carpool language Banks – Comp and collision If TNC insurance provides comp or collusion, payment to body shop or jointly to owner and lienholder

NCOIL MODEL Insurance Provisions (Sections A, C, D, and E) Adopted July 19, 2015 Substantively, same as Compromise Language Subsection E.1.f.: Clarifies effect of exclusions “Nothing in this Article shall be construed as to require an insurer to use any particular policy language or reference to this section in order to exclude any and all coverage for any loss or injury that occurs while a driver is logged on to a Transportation Network Company’s Digital Network for while a Driver provides a Prearranged Ride.”

NCOIL MODEL TNC Regulatory Provisions (Section B) Very similar to SB1280 SD2 HD2 TNC Company Permits required Drug and alcohol policy Background checks Driving History Requirements

NAIC TNC “WHITE PAPER”   ADOPTED BY THE EXECUTIVE COMMITTEE (EX) AND PLENARY ON MARCH 31, 2015. “WHITE PAPER” IS MORE DESCRIPTIVE OF THE ISSUES THAN PRESCRIPTIVE OF A SPECIFIC APPROACH. NAIC PROVIDED STATEMENT OF GENERAL INSURANCE PRINCIPLES FOR LEGISLATORS AND REGULATORS TO CONSIDER IN DRAFTING LAWS AND REGULATIONS. STUDY LOOKED AT INSURANCE COVERAGE ISSUES FROM PERSPECTIVE OF INSURERS, TNCS, DRIVERS, PASSENGERS, OTHER FOR-HIRE PROFESSIONALS, AND INTERESTED THIRD-PARTIES. “WHITE PAPER” DISCUSSED POTENTIAL SOLUTIONS TO COVERAGE ISSUES AND POTENTIAL NEW INSURANCE PRODUCTS/COVERAGE OPTIONS.

NAIC TNC “WHITE PAPER”   NAIC PROVIDED A DETAILED EVALUATION OF CO, IL, AND CA TNC LAWS, AND REGULATORY ACTIVITIES IN VARIOUS STATES (CA PUC REGULATORY PROJECT WAS SPECIFICALLY ADDRESSED). AN ENTIRE SECTION OF PAPER WAS FOCUSED UPON SPREADING THE INSURANCE BURDEN BETWEEN TNCS AND TNC DRIVERS. “WHITE PAPER” REFERENCED AND DISCUSSED “NATIONAL COMPROMISE AGREEMENT” ON INSURANCE COVERAGE REQUIREMENTS. NAIC COMMENTED ON THE IMPORTANCE OF PUBLIC COMMUNICATION, EDUCATION, AND OUTREACH – OVER 25 REGULATORS HAVE ISSUED CONSUMER ALERTS.

Are Drivers Employees or Contractors? O’Connor et al v. Uber Technologies, Inc. et al, Case No C-13-3826 EMC Cotter, et al., v. Uber Technologies, Inc. et al, Case No 13-cv-04065-VC Both Pending U.S. District Court San Francisco

Factors to Prove Employee Status Defendant supplied equipment, tools, place of work; Individual paid hourly instead of by job; Work is part of regular business of Defendant; Defendant had unlimited right to end relationship; Work performed is only occupation/business; Type work is usually supervised;

More Factors Type work does not require specialized or professional skill; Services performed over long period of time; Both act as if there is an employer-employee relationship.

Plaintiffs granted class status last week Will be decided by jury Plaintiffs granted class status last week