Taxi Insurance Insolvency
Should the Public be Concerned about
Taxi Insurance Company Insolvencies
Joseph Monaco, Pennsylvania & New Jersey Trial Lawyer
Call or text 609-277-3166 in New Jersey or 215-546-3166, in Pennsylvania
Recently, there has been news about another taxi industry insurance company going insolvent. It may not seem like a an issue the public should that concerned about, but in actuality, you should be concerned especially if you or a family member have been injured or killed in a Pennsylvania or New Jersey taxi accident. First Keystone Risk Retention Group, Inc. has been deemed insolvent by a South Carolina judge. The company is organized under the laws of South Carolina but has its headquarters in Philadelphia, where it insures many taxis, who will now have to seek alternative coverage.
This may not appear to be a major issue; however, unlike traditional insurance companies, retention groups do not have to pay into state guarantee association schemes, which provide coverage in the event of an insurance company’s insolvency. As a result, injury victims will likely have no recourse for their unpaid medical and liability claims. A spokesperson for several Philadelphia taxi owners contends that victims could levy on the taxi medallions valued at approximately $500,000 in Philadelphia; however, this is misleading because most taxi drivers are set up as independent contractors to avoid liability of the taxi and medallion owners.
An important issue that should be addressed by Pennsylvania and New Jersey lawmakers is why are these retention groups allowed to issue insurance and not pay into the guarantee association scheme like other insurance companies do in Pennsylvania and New Jersey as well as most other states. If the retention groups were required to be part of this scheme, then Pennsylvania and New Jersey’s guarantee associations would step in and pay the outstanding claims. Another taxi retention group, Ocean Risk Retention Group, Inc., went insolvent in 2011. Pinelands Insurance Co. Risk Retention Group, Inc. who also provides insurance to taxis in Pennsylvania and New Jersey is having financial difficulties paying claims, and has voluntarily suspended writing all new and renewal business as of March 9, 2015. Hopefully, this important issue of retention groups not being required to pay into a state’s the guarantee association scheme will be addressed by legislation to end this practice.
If you or a family member have been killed or injured in a Pennsylvania or New Jersey taxi accident, please contact me by calling or texting 609-277-3166 in New Jersey or 215-546-3166, in Pennsylvania to learn what your rights are given the uncertainty in the taxi insurance industry.