With up to 70 per cent of Victoria’s taxis operating without effective third-party property damage insurance, the situation has reached crisis point. Recent media coverage, most notably in the ABC’s 7.30 Report has rocketed the issue into the public domain, and shown in sharp relief the tip of an iceberg that threatens, not just the Victorian taxi industry, but all road users.
If you have an accident with a taxi in Victoria, you’re likely to be in serious financial strife – whoever’s fault it is.
Unless that taxi was one of the small minority that are properly insured, forget about doing anything other, than forking out the excess on your own insurance and paying for the damage yourself.
For many taxi owner-operators the news is even worse.
If your cab is involved in an accident and you’re a member of an unregulated taxi club, your club’s discretionary rules may mean that you are personally liable for tens of thousands of dollars of third-party damage despite having what you thought was comprehensive insurance cover.
What’s more, as things stand now, you have almost no recourse to legally challenge the club if it refuses to pay.
In the 7.30 Report, aired on August 17, the ABC highlighted a dispute between the Metro taxi club and a former member owner operator Mr Kahlil Antoune.
After Mr Antoune’s cab was involved in a three car pile-up in 2010, causing over $40,000 worth of damage, he approached his club to make a claim on the ‘comprehensive insurance cover’ he assumed he had, as a fully paid-up member.
The claim was dismissed and his membership revoked – the Metro Club maintaining that Mr Antoune had broken the club’s rules by not reporting the accident within 24 hours, and because repair work had been undertaken by a panelbeating shop other than one stipulated by the club.
The ABC report featured a doorstop interview with taxi licence broker Jim Karapanagiotidis, an associate of the Metro club. This week the club’s administrator Chantelle Karapanagiotidis defended the club’s actions, telling Neos Kosmos:
“[Mr Antoune] just breached the whole policy of Metro Club therefore [he] got terminated.
“We pay our bills. We have a third-party underwriter. Everything we do as Metro Club is legit,” said Ms Karapanagiotidis, who added:
“There are dodgy clubs out there but don’t slander our name when other clubs are doing worse than what we have done.”
Denis Nelthorpe, manager of the Taxidriver Legal Service representing Mr Antoune, argues that the situation is symptomatic of the gaping legal loopholes that exist for unregulated taxi clubs.
“What we have here is a case of a owner-operator who has paid a premium, was willing to pay the excess, but who is then told by the club, ‘oh no, we don’t want to be involved’.”
“This dispute highlights the difficulty of having what is ‘quasi-insurance'”, said Mr Nelthorpe.
“If it was real insurance Mr Antoune would be covered by the Insurance Contracts Act and he would be able to go the Financial Ombudsman Service. They would test out whether the reason for rejecting the claim was legitimate.”
Mr Nelthorpe says that Mr Antoune is continuing to investigate whether or not he can pursue his claim against Metro club through the courts.
A long-time campaigner in pleading for the regulation of Victoria’s taxi clubs is George Karas, managing director of Taxicare Australia – a national not-for-profit public company based in Melbourne, that provides insurance cover for thousands of owner-operators.
Mr Karas, who has provided the Allan Fels inquiry with three submissions, told Neos Kosmos:
“We moved our business interstate in 2004 due to having to compete with clubs that offer premiums at half the cost of what we know is needed to survive in the taxi insurance industry.
“The fact that we provide real insurance for over 3500 taxi cabs, in every state, but only 300 cabs on our books in Victoria tells you something.”
Mr Karas says that in the event of a Taxicare Australia member wishing to report a perceived wrong-doing, that member would have immediate recourse to appeal to an independent regulator.
“We would be contacted by the authorities that regulate us – ASIC (the Australian Securities and Investment Commission) in our case, to please explain.
“These unlicensed, unregulated entities don’t answer to anyone.”
“If Allan Fels implements what’s written in his report, all Victorian taxis will have to have a minimum of third-party property damage and public liability, and that this cover can only be provided by an entity that is governed by either APRA (Australian Prudential Regulation Authority) or ASIC.
“We’ve been crying out for this for ten years. My argument was always that the consumer has never been protected from unregulated clubs.
“Consumer Affairs Victoria are looking at these matters since the ABC’s coverage last month, but I have grave doubts they will fix the problem.
“It’s Allan Fels that has all the power here, and believe me, there’s a lot of worried people out there because they don’t want change.”
One vital and unresolved issue for the Fels Inquiry says Karas, is how to prevent unscrupulous insurance brokers who offer third-party property damage cover with underwriters like QBE – which give unregulated clubs the veneer of having third-party cover.
“When Fels makes insurance mandatory the clubs will still be able to use authorised ASIC brokers to offer third-party property damage policies.
“The fact that these policies have a minimum of $10,000 excess and often up to $25,000, means that insurers like QBE will hardly ever see claims come through, because the clubs have complete autonomy in deciding whether to pay the claims or not.
“Putting in place legislation to solve that situation is crucial in finding a long-lasting solution to the scandal of under-insurance in Victoria’s taxi industry,” says Karas.
The Allan Fels Inquiry will present its recommendations to the Victorian Government by the end of the year.