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“Not only is it illegal to offer this service but additionally for the consumer there is a real danger,” French interior ministry spokesperson Pierre-Henry Bran

by grej 12y ago

“Not only is it illegal to offer this service but additionally for the consumer there is a real danger,” French interior ministry spokesperson Pierre-Henry Brandlet told iTELE, questioning drivers’ inadequate insurance. Many of the justification for these bans do seem to focus on the perception of inadequate insurance for the drivers. I wonder if Uber's next move will be to ask the drivers (in the markets that require it) to procure some type of commercial insurance. The catch for them is that they may not be able to do that through the company without putting themselves even more at risk in the ongoing class action lawsuit on its classification of drivers as contractors vs. employees. It will be very interesting to see how it all plays out.

watwut 12y ago
Will they be able to compete on price if they do that? Commercial insurance is usually more expensive.
- grej 12y ago
  It's a big question. There have been so many stories already about many drivers facing money losing rides. Unless Uber is willing to pass along a fare increase in markets requiring commercial insurance, they certainly won't be able to get their drivers to sign up for commercial insurance. Even then, there are other issues at play as well (Taxi unions, etc.) which could come up with other reasons to stop Uber.
- rmc 12y ago
  "Will they be able to compete on price?" Sounds like the current low prices are the result of cutting corners and not having adequate insurance. Which makes me side against Uber here.
  - prostoalex 12y ago
    Yeah http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber http://talkingpointsmemo.com/edblog/understanding-the-econom... There's no economy of scale that's typical of technology companies here - Uber drivers are not able to buy cars cheaper in bulk, get a better deal on gas, or buy commercial insurance at much cheaper rates. Hertz or Avis have a better cost structure than Uber. The price advantage comes from skirting the regulation on taxi medallions (only relevant for a few large markets like NYC) and skirting commercial insurance requirements.
- hnnewguy 12y ago
  >Will they be able to compete on price if they do that? Can they even be considered to be competing now, if they can't assure me that the driver will be able to cover expenses if he injures and/or kills me or other passengers?
anon1385 12y ago
Pushing those kinds of costs onto the drivers seems to be one of the main points of Uber. http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber/ http://talkingpointsmemo.com/edblog/understanding-the-econom... >Since no one can provide plausible Uber growth theories based on major productivity/service improvements, one must consider the possibility that Uber management’s growth strategies may be at least partially based on drivers it would not want to publicize. The labor exploitation hypothesis suggests that Uber not only hopes to avoid paying higher costs that might be needed to attract drivers away from competing companies, but hopes to actually achieve driver costs lower than what existing companies face, by exploiting significant information dissymmetries. One key is Uber’s “independent contractor” approach, whereby those drivers provide the vehicle, vehicle maintenance and liability insurance. As mentioned earlier, traditional business logic suggests that this approach could not work because existing companies could always get much better rates than individuals acting in isolation. In these situations Uber has shifted the full vehicle capital risk (normally borne by a taxi company) to the driver; this allows Uber to grow without raising much capital, but there is no evidence that drivers are being compensated for their (collectively) large capital contribution, or the risk that Uber exercises it rights to suddenly terminate the contract of the person who had purchased a vehicle on its behalf. Similarly, the typical taxi/limo driver may not understand the true maintenance/depreciation costs of intensive commercial use as well as professional fleet managers, and multiple reports indicate Uber drivers do not always understand the requirement to purchase commercial insurance with significantly greater liability coverage than their personal policies (carrying paying passengers would invalidate their personal policies and violate laws in most cities).
ibejoeb 12y ago
I don't know much about French insurance, but Uber is probably endowed enough at this point to self-insure as a means of reducing premium expenditure. It will have to place nice with the governments and reserve accordingly, but there are plenty of companies with similar risk profiles, e.g., Enterprise.

by grej 12y ago

watwut 12y ago

Will they be able to compete on price if they do that? Commercial insurance is usually more expensive.

grej 12y ago
It's a big question. There have been so many stories already about many drivers facing money losing rides. Unless Uber is willing to pass along a fare increase in markets requiring commercial insurance, they certainly won't be able to get their drivers to sign up for commercial insurance. Even then, there are other issues at play as well (Taxi unions, etc.) which could come up with other reasons to stop Uber.
rmc 12y ago
"Will they be able to compete on price?" Sounds like the current low prices are the result of cutting corners and not having adequate insurance. Which makes me side against Uber here.
- prostoalex 12y ago
  Yeah http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber http://talkingpointsmemo.com/edblog/understanding-the-econom... There's no economy of scale that's typical of technology companies here - Uber drivers are not able to buy cars cheaper in bulk, get a better deal on gas, or buy commercial insurance at much cheaper rates. Hertz or Avis have a better cost structure than Uber. The price advantage comes from skirting the regulation on taxi medallions (only relevant for a few large markets like NYC) and skirting commercial insurance requirements.
hnnewguy 12y ago
>Will they be able to compete on price if they do that? Can they even be considered to be competing now, if they can't assure me that the driver will be able to cover expenses if he injures and/or kills me or other passengers?

anon1385 12y ago

Pushing those kinds of costs onto the drivers seems to be one of the main points of Uber. http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber/ http://talkingpointsmemo.com/edblog/understanding-the-econom... >Since no one can provide plausible Uber growth theories based on major productivity/service improvements, one must consider the possibility that Uber management’s growth strategies may be at least partially based on drivers it would not want to publicize. The labor exploitation hypothesis suggests that Uber not only hopes to avoid paying higher costs that might be needed to attract drivers away from competing companies, but hopes to actually achieve driver costs lower than what existing companies face, by exploiting significant information dissymmetries. One key is Uber’s “independent contractor” approach, whereby those drivers provide the vehicle, vehicle maintenance and liability insurance. As mentioned earlier, traditional business logic suggests that this approach could not work because existing companies could always get much better rates than individuals acting in isolation. In these situations Uber has shifted the full vehicle capital risk (normally borne by a taxi company) to the driver; this allows Uber to grow without raising much capital, but there is no evidence that drivers are being compensated for their (collectively) large capital contribution, or the risk that Uber exercises it rights to suddenly terminate the contract of the person who had purchased a vehicle on its behalf. Similarly, the typical taxi/limo driver may not understand the true maintenance/depreciation costs of intensive commercial use as well as professional fleet managers, and multiple reports indicate Uber drivers do not always understand the requirement to purchase commercial insurance with significantly greater liability coverage than their personal policies (carrying paying passengers would invalidate their personal policies and violate laws in most cities).

ibejoeb 12y ago

I don't know much about French insurance, but Uber is probably endowed enough at this point to self-insure as a means of reducing premium expenditure. It will have to place nice with the governments and reserve accordingly, but there are plenty of companies with similar risk profiles, e.g., Enterprise.