Kansas City could make terrible ridesharing market even worse
I was in Dallas last week and used my Uber account to hire rides from Love Field to the hotel, and then back again when I was finished with my business. I am a frequent traveler, with a long history of trying to find the right balance between inexpensive ground transportation and getting to my destination in a timely fashion. I also use shuttles, light rail, city buses, subways and Uber’s competitor ride-sharing service Lyft where available. As I travel frequently on my own nickel, I consider transportation options very carefully most of the time.
It has been interesting to watch the politics of transportation options. Traditional livery and transportation services – threatened by the emergence of digitally summoned, paid, receipted and rated operations like Uber and Lyft – have moved to protect their turf by seeking to have the popular new services regulated out of existence.
It’s reminded me very much of the grocery store clerks’ union trying to stop the automated checkout scanning in supermarkets, which rarely makes mistakes, in comparison to humans trying to key in thousands of prices every day at the registers. We had major league fights in the legislatures some years ago about this, but technology finally won out, and we are mostly better off for it in the 21st century.
There is another wave of legislation accompanying this relatively new transportation option. Much of it has to do with rationalizing the insurance that covers accidents involving vehicles used for ride-sharing. Because they are privately owned, yet at times engaged for hire, ride-sharing drivers’ cars need coverage that allows for commercial activity, which requires insurance appropriate to the higher-risk profile of a driver-for-hire.
This is an undertaking that requires a sorting out of risks from casual and part-time engagement as a livery service to virtually full-time work as a driver. As one can imagine, the public policy question of mandating the proper level of liability coverage for accidents turns on when the driver is operating his or her vehicle privately and when it is for hire. The period of time when a driver makes him or herself available, but has not yet acquired a passenger has received the most attention.
For the most part, state legislation has provided the best solutions, although many municipal ordinances have produced good public policy and happy customers. My colleagues at R Street have produced a white paper rating the transportation friendliness of the top 50 cities in America, which you can access here.
Where the state or its major cities can go wrong, in our judgment, is currently exemplified by the Kansas City market. Kansas City was given an “F“ grade in transportation friendliness by our ratings, including the highest score in the chart for “hostile regulation.”
The city appears bent on maintaining a poor score for apparently trying to regulate the new services as taxicabs, but reportedly requiring higher fees and more insurance than taxis are required to carry. The City Council has been debating an ordinance for “months,” according to the Kansas City Star, and it goes to the full council this week. Lyft suspended operations in Kansas City last October, and Uber has said publicly that its drivers will be priced out of the market, as well.
At the same time, both houses of the Kansas Legislature have passed and sent to Gov. Sam Brownback a bill which increases the insurance requirements and requires background checks of drivers. The latter is sound public policy, but requiring insurance for physical damage to the vehicles, which even taxis are not required to carry, seems like harassment.
Meanwhile, the Missouri Legislature, which governs most of the Kansas City metro area, is considering a bill to prohibit local regulation of transportation network companies. These divergent approaches could produce real schizophrenia in the metro area.
We have to come down on the side of the customer in all this. We think that safety regulation and insurance liability coverage are important, but that places like Kansas City, which aren’t yet finding the right balance of public interests, ought to reconsider in light of what many other jurisdictions are able to fashion as workable rules for both the insurers, the TNCs and those of us who travel a lot.