Angry cabbies protested in front of City Hall Tuesday, seeking tighter regulation of ridesharing services such as Uber, Lyft and Sidecar, which have rapidly risen in popularity in Los Angeles. And local politicians are listening.City Council members Paul Krekorian, Paul Koretz and Gilbert Cedillo declared their support for state Assembly Bill 612, which would require rideshare services to submit to the same requirements that traditional cab companies follow. Among those requirements are vehicle inspections, drug testing, background checks and primary insurance for all its drivers, according to the Los Angeles Register.
Koretz, councilman for District 5, said Tuesday that the bill would make riders safer.
"The insurance isn't adequate, the background checks aren't adequate, and we're finding there are felons on the road," he told the Register.
And the insurance issue is one that keeps raising controversy. As reported by the Silicon Valley Business Journal, the California Public Utilities Commission is proposing a significant expansion of the insurance requirements it imposed last fall on the ridesharing services.
The state is seeking $1 million primary, commercial insurance coverage for drivers as soon as they open a smartphone ride dispatching mobile application, not just when a ride order is accepted. And as the SVBJ reported:
"The state also wants to broaden the requirement for medical payment coverage in the amount of $5,000, comprehensive and collision coverage in the amount of $50,000, and uninsured/underinsured motorist coverage in the amount of $1 million per incident."
The CPUC will meet to decide the issues on July 1o, but in the meantime the commission is accepting public comments while the debate continues.
Another point of contention for cabdrivers is the fact that they are required to have permits to pick up customers, whereas Uber and other companies operate on a cash-free system, allowing passengers to pay via Internet accounts -- and eliminate tips.
Marco Soto, Yellow Cab's vice president of marketing and public affairs told the newspaper that the reason Uber and other companies are able to offer cheaper rides is that they don't have to pay for the same insurance that his company and others are forced to buy.
"They're able to undercut the price of taxicabs significantly because insurance is a third of the cab company's cost structure," Soto said.
On the other side of the debate is Uber, which released a statement denouncing the protest as an effort to "distract from the facts."
"While Uber is focused on offering a safe, convenient and reliable transportation alternative, Big Taxi is choosing to spread misinformation and line their pockets," the statement said. "This legislation is not about safety or consumers; it's about protecting entrenched Sacramento special interests from competition. Californians across the state support innovation, consumer choice and economic opportunity - it's time for the legislature to listen to the voice of people over the voice of the status quo."
Uber, which began offering rides in March 2010 provides services in 40 countries and 58 U.S. cities. The company has been in L.A. for two years and sprang up in Orange County last September. The company announced last Friday that it has raised $1.2 billion from investors, putting its total valuation at $18 billion, the newspaper reported.