Ridesharing services such as Uber and Lyft, which allow customers to use smartphones to hail nearby independent drivers, recently have become popular, convenient ways to get around parts of Hawaii.
Now, as jurisdictions around the world consider whether these innovative services operate on a fair playing field with local taxicabs, the future of rideshare companies in the Aloha State is playing out at the state Capitol.
The Legislature for the first time is looking to regulate rideshare companies, possibly through the Public Utilities Commission.
The head of Uber’s Hawaii operation said the company contracts with "hundreds" of independent drivers across Oahu and Maui but declined to specify exactly how many for competitive reasons.
The company came on the scene locally in a limited capacity in 2013, before introducing the general rideshare service that most users know, UberX, in 2014.
On Monday the House Transportation Committee listened to arguments on dueling bills representing two different paths for rideshare services, also called "transportation network companies."
One, House Bill 1287, would allow those companies to continue operating in a similar manner as Uber, their drivers able to switch between personal and commercial insurance policies depending on whether they have a paying passenger aboard. The measure would have a zero-tolerance drug and alcohol policy for drivers and require background checks.
The other bill, HB 1463, would require rideshare companies to use only commercial motor vehicle insurance just as traditional taxi drivers do. Taxi companies and insurance groups have generally testified in favor of this second bill, although they’d like to see some changes made to it.
Uber officials, meanwhile, are adamant that they want the company and its drivers to be regulated by the state so that they can move ahead. But requiring their contract drivers to have commercial insurance at all times "would be the end of ridesharing as it currently stands, for sure," said Brian Hughes, general manager of Uber Hawaii.
Being able to switch between personal and commercial insurance coverage is critical for Uber to succeed, Hughes said after Monday’s testimony. Many of Uber’s drivers operate part time and "really appreciate the flexibility," he said. "For them to take on a $3,000-a-year commercial insurance policy would probably be prohibitive to them driving."
David Jung, general manager of Eco Cab, testified before state lawmakers that holding rideshare drivers to the same regulations as taxi drivers was important to ensure public safety. The state’s taxi drivers have to pass physical exams assessing blood pressure, diabetes, vision — they’re even checked for hernias to ensure they can help remove a passenger in an emergency, he said.
"If we’re going to be required to jump through the hoops … then everyone else should be," Jung said Monday, arguing that rideshare and taxi drivers essentially perform the same service.
It’s a similar debate that’s playing out in jurisdictions across the U.S. as authorities look for the best way to allow innovative ideas such as those behind Uber and Lyft to succeed without giving those companies an unfair advantage over highly regulated taxi companies or compromising on consumer safety and protections.
More than two dozen U.S. jurisdictions, including three states, have created "frameworks" to allow rideshares to operate, Hughes said.
"We did have some discussions at the City Council level here in Honolulu as well, but it looks like it might be a state issue," he added.
The city of Portland, Ore., meanwhile, has sued Uber to stop operating there, according to recent news reports.
Hours before the House Transportation Committee took up the issue in Hawaii, taxi and limousine drivers in New Jersey demonstrated with picket signs in favor of legislation to hold rideshare services to the same insurance and background checks, according to the website NJ.com.
Uber driver Wesley Yamada, a former taxi driver of eight years, told the House committee in Hawaii that he’s found it better to work for Uber because without all of the fees and insurance costs related to taxi driving, he has to work only about eight to nine hours a day instead of 12 to 15.
"It’s a cashless system, so I don’t have to worry about being robbed," and drivers have to be safe or they’ll be reported to the company, he said.
In his written testimony, Hughes added that Uber uses third-party criminal background checks going back seven years for potential drivers.
Various insurance groups, including the local trade association Hawaii Insurers Council, voiced concerns that rideshare drivers simply aren’t covering their full share of the risk when they switch between personal and commercial policies. In written testimony, at least one of those groups noted that the costs associated with that risk could be shifted to other policyholders.
Hughes testified that Uber offers $1 million in liability for its drivers, but only when they have passengers. He said later that that’s five times the amount that Honolulu taxi drivers are required to carry — although by law the taxi drivers cannot revert to a personal insurance policy.
Uber further provides a "contingency" policy for its contract drivers covering the period between when they’ve made themselves available to a customer but before they’ve actually picked anyone up, Hughes said.
The House Committee on Transportation deferred a decision on whether to pass either of the rideshare bills to its hearing Wednesday.
