New York’s insurance regulator issued a damning report laying out the severely flawed financial condition of New York’s largest insurer of taxis and for-hire vehicles, as well as dozens of potential financial improprieties and accounting problems, warning that the consequences of failure could be devastating for tens of thousands of drivers in the city.
The report, which includes years’ worth of previously unpublished correspondence and comprehensive state-mandated examinations of American Transit Insurance Co., shows state regulators under both current Governor Kathy Hochul and her predecessor Andrew Cuomo have been aware for at least half a decade about the dire financial circumstances, yet until now failed to take serious action that would force the company to address its problems.
The company known as ATIC has had reserves that are “massively deficient,” according to a letter from New York’s Department of Financial Services dated April 3 that was posted to the DFS website.
DFS Letter to American Transit on Insolvency
ATIC must take “immediate action” to cure its insolvency and should “explore all possible options to obtain funding,” according to the letter. This includes a potential sale to a counterparty able to infuse capital, the regulator said.
“If this situation is not resolved, ATIC is at significant risk of failure,” the letter warned. “This would be economically devastating for livery drivers, passengers, health care providers and the New York economy, and would disrupt vital transportation services.” DFS said.
Read More: NYC’s Top Taxi Insurer Is Insolvent, Risking Transit Chaos
“The company is working tirelessly to address a longstanding issue of statutory solvency amid rampant fraud and escalating costs,” ATIC said in a statement on Thursday. “We are working closely with industry participants towards a solution that does not unduly impact the broader market in an adverse manner. ”
Run by Ralph Bisceglia, ATIC has become a key player in the New York transit ecosystem, building a market share of about 60% of the city’s taxis and rideshare vehicles by offering relatively cheaper plans than competitors. Bloomberg reported this week that industry analysts and taxi owners were concerned over the future of the company after it posted more than $700 million in net losses in the second quarter — a view shared by the DFS.
“A collapse of ATIC would leave tens of thousands of livery drivers uninsured and without a source of income,” according to the letter.
Regulators also scrutinized the company’s management, oversight and spending. They recommended that ATIC recover payments made to affiliates and bonuses paid to company officers totaling $22 million, according to a separate letter from the DFS dated May 17.
Top Photo: Taxi drivers park their cabs in protest outside Gracie Mansion in New York, U.S., on Friday, Oct. 16, 2020. New York City yellow cab drivers are calling for debt forgiveness from loss of work during the COVID-19 pandemic. Photographer: Paul Frangipane/Bloomberg
Topics Carriers Profit Loss New York