Tens of Thousands of Yellow Cabs in Jeopardy as NYC’s Biggest Taxi Insurer is Insolvent

Even in the age of ride-shares, New York’s yellow cabs are iconic symbols of the city. But their challenges go beyond Uber and apps today. 

Just one company, American Transit Insurance Company (ATIC), insures over 60% of 117,000 taxis and for-hire vehicles. And it’s insolvent. New York’s Department of Financial Services (DFS) excoriated the company in a report that said it should consider a sale or other drastic “immediate action” to stave off a failure that would cause transit chaos.

Too Big to Hail

A family firm run by Ralph Bisceglia, ATIC carved out its sizable market share by offering plans at a discount relative to competitors. Bloomberg reported earlier this week that industry observers — and taxi drivers — were alarmed when ATIC posted a jaw-dropping $700 million second-quarter loss.

“To see this kind of loss of this size — there are few precedents,” Tim Zawacki, an insurance analyst at S&P Global Market Intelligence, told the outlet. “If this company is going to be unable to continue business, there’s going to be significant fallout in terms of who is going to insure all of these drivers.” The ripple effects could be felt across America’s largest metropolis:

• ATIC has had deficient reserves for decades, but matters have gotten worse as larger claim sizes have rolled in, leaving it teetering on the brink. “A collapse of ATIC would leave tens of thousands of livery drivers uninsured and without a source of income,” the DFS said in an April letter to ATIC, published with its report.
• In April, the DFS told ATIC it should “explore all possible options to obtain funding,” including a sale, in order to avert a catastrophic transit pileup. In the event of a failure, tens of thousands of taxis, limos, Ubers, and Lyfts would suddenly be uninsured, and other insurers would struggle to handle the massive business. Also, premiums would likely go up, crunching the whole industry.

Give it Back: The DFS said ATIC should claw back $22 million paid out to affiliates and company officers in a May letter that was disclosed in the report.