With the Allan Fels Taxi Industry Inquiry’s recommendations due to be acted upon by the Victorian government within days, a case was heard at the Supreme Court last week following a dispute between two companies involved in providing insurance for taxis. How Victoria’s cabs are insured and the role played by unregulated taxi clubs has hit the headlines recently, with concerns which include the lack of effective third-party damage cover that exists in the industry.
On October 18, an application for an injunction against insurance brokers Arcuri and Associates Pty Ltd (AAPTL) by Melbourne-based company Taxicare Australia, was upheld by the Victorian Supreme Court. As Australia’s largest national taxi insurance scheme, Taxicare is regulated by ASIC (the Australian Securities and Investment Commission) and has over 3000 members nationally. Arcuri and Associates were engaged by Taxicare between 2004 and 2012 until Taxicare chose to end its business relationship with Arcuri earlier this year.
George Karas, managing director of Taxicare told Neos Kosmos that he had sought the injunction to prevent AAPTL from sending misleading and incorrect correspondence to his members. “What’s clear from the Supreme Court’s Order and the judge’s statements is that Arcuri’s correspondence to our members over the last seven months was unwarranted, inaccurate and above all was under no legal obligation in sending them in the first place,” said Mr Karas. “We’ll reserve public comment on the effect of those letters, and the information they contained until the documents that we’ve asked for – and been granted – are made available.”
Neos Kosmos understands the correspondence of over 1000 letters induced at least one Taxicare member to pay his insurance premium twice, and suggested to approximately 50 other members that no insurance cover was being provided to them by Taxicare. The Order – made by Justice Emilios Kyrou on October 18 – acknowledged that there was a serious question to be tried in that the correspondence from Arcuri and Associates may have been misleading and that the ‘balance of convenience’ was in favour of granting the injunction.
The Order now prevents AAPTL from contacting Taxicare Australia’s members directly. Instead, the broker must channel any future communications through Taxicare. The Court also upheld a request for Arcuri to provide limited preliminary discovery of documents – to allow Taxicare to assess a possible action for damages. While former commercial allies falling out might not in itself be significant in terms of the wider public interest, the spat hints at wider problems. “This I believe is a result for fairness and responsibility – a first step in making sure entities like Arcuri and Associates show professionalism as brokerage firms and do not opt for greed instead,” said Mr Karas.
“I also believe this decision goes some of the way to ensuring responsible and effective taxi insurance businesses, taxi owner operators and the public, can and will be protected from unscrupulous practices.”
Despite the injunction succeeding against his company, Mr Joe Arcuri, managing director of Arcuri and Associates remained upbeat about the result. “We had a long-standing arrangement whereby we arranged third-party insurance on behalf of members of Taxicare and we’re happy to comply with all the requirements of the Order,” he told Neos Kosmos. Mr Arcuri said that the Order would have no ramifications for his business. “We have absolutely nothing to hide. We’re more than happy to send correspondence through them.
We agreed to this ruling and in fact we see it as a bonus for us because we save on postage.” Arcuri and Associates have until November 8 to provide limited preliminary discovery of documents – including a 2011 audit by underwriter QBE – after which Neos Kosmos understands Taxicare Australia may pursue a Statement of Claim for damages. The issue of effective third-party property damage insurance has long been a bone of contention in the Victorian taxi industry, with a trail of disputes between owner-operators and unregulated taxi clubs who offer third-party insurance policies through brokers.
The Fels Inquiry’s recommendations are due to make such cover compulsory and pull Victoria into line with other states. However many believe that because of the costly excesses (often tens of thousands of dollars) contained within these policies – compounded by the ability of Victoria’s unregulated taxi clubs to make arbitrary decisions on claims – such cover is, and will continue to be, largely ineffective. The end result? Apart from owner-operators being stung, the driving public lose out big-time by being inadequately protected in the event of having an accident with a taxi. Getting the regulatory arrangements right post-Fels will be the challenge.