CHICAGO, ILLINOIS - During the 1920s, Al Capone’s infamous syndicate carried out their bloody reign of bootlegging and racketeering terror with impunity. With Big Bill Thompson, Chicago’s last Republican Mayor, in his pocket Capone had nothing to fear.
If questioned by police, Capone’s thugs merely presented them with cards issued by Thompson that read: "To the Police Department--you will extend the courtesies of this department to the bearer."
Like Capone, Uber, too, has been extended all the Chicago “courtesies.” UberX drivers are putting themselves and the public at-risk – unknowingly – with serious gaps in their insurance coverage. But Uber is fully aware of this and the politicians that they are aligned with are too.
Prior to the passage of Mayor Rahm Emanuel’s city ordinance in May, Uber had essentially been operating an illegal taxi service in Chicago, one of the most highly regulated cities for cab companies in the country. It was just a few weeks later that Uber cemented its $1.2 billion-dollar raise and an $18 billion valuation that made national headlines.
Now comes GOP gubernatorial candidate Bruce Rauner, the latest politician to succumb to Uber’s wiles.
So smitten is Bruce the Billionaire with Uber that he tripped badly over his own public statement last week urging his opponent, Illinois Gov. Pat Quinn, to veto HB 4075, which would require Uber and Lyft drivers to have a chauffeur's license and commercial insurance in Illinois:
“Ride-share drivers should have insurance and background checks. But Pat Quinn shouldn’t sign this bill – it sends another signal that Illinois is closed to innovation," Rauner said.
So Rauner says that ride-share drivers should have insurance and background checks but wants Quinn to veto the bipartisan bill that requires that because that would mean Illinois is closed to innovation?
Rauner also gushed about all the jobs Uber would create.
"Uber is an innovative, growing company that provides ride-share services to millions of people across the country and wants to create 425 more jobs right here in Illinois,” Rauner added.
But here comes the hitch.
Yes, Uber is intent on dismantling – legally or illegally – the taxi industry. However, the cab industry is responsible for more than 30,000 jobs in Illinois – many more than the 425 potential Uber jobs Rauner was so giddy about.
Unlike Uber, the Illinois taxi industry pays more than $25 million annually in state and city taxes. To protect consumers with primary liability coverage, the taxi industry pays $4000 or more per vehicle – at least $60 million in insurance premiums per year in Illinois alone. But Uber’s basic excess insurance coverage only protects Uber and no one else.
In contrast to UberX drivers, cab companies must purchase new cars from dealers every year to meet city standards. In fact, last week, in his personal salute to clunkers, Rauner was pictured in a Tribune photo, sitting in an UberX car – a 2005 Toyota Camry with 200,000 miles on it.
Why didn't Rauner mention any of this? More to the point, can Rauner answer what - if anything - Uber actually contributing to Illinois' economy?
Sadly, Rauner is not the only politician on Uber’s tick list.
Uber has spent millions of dollars buying up political influence peddlers and hiring lobbyists with ties to President Obama, Mayor Rahm Emanuel, and former New York Mayor Michael Bloomberg. Not coincidentally, one of Uber’s recent acquisitions is Jack Lavin, former Chief of Staff to Gov. Quinn.
The political and financial stakes are very high indeed.
Mayor Emanuel’s brother, Ari, was an early Uber investor and stands to make hundreds of millions – or more - from the venture. Both Mayor Emanuel and his close friend Bruce Rauner have financial ties to Goldman Sachs, another major Uber investor.
When this kind of money is involved, politicians tend to start acting strangely. In Uber’s case, the Emanuel Administration has intentionally looked the other way even when it comes to issues of public safety.
In December, Chicago Department of Business Affairs and Consumer Protection commissioner Rosemary Krimbel was “reassigned” after tweeting her serious concerns about the insurance and safety of ride-share vehicles.
“Be sure your cab is licensed and safe plate number should be four digits or less with a TX,” Krimbel tweeted last September.
In January, after her “reassignment,” Krimbel tweeted an article about six year-old Sophia Liu, who was tragically struck and killed by an Uber driver. The accident was not covered under Uber’s policy.
As UberX drivers continue to proliferate, there is more reason than ever for public concern. Uber's business model is based on evading taxi regulations and commercial liability insurance costs. Uber wants special rules that only apply to Uber.
At last estimate, Uber and Lyft had more than 70,000 drivers across the U.S. If Uber were required to obtain commercial liability insurance for each vehicle, the cost could easily exceed more than half a billion dollars per year. That is not the financial position Uber wants to be in when it initiates its IPO.
So Uber continues this deceptive dance with politicians and…with UberX drivers.
For instance, Uber requires its drivers to warrant that they have “proper insurance.” However, Uber never explains what “proper insurance” means. Most UberX drivers are using their personal auto insurance coverage – a policy that does not cover them while they are providing ride-share services or while they are on-call for Uber. If a driver gets into an accident, Uber’s commercial “excess” policy does not “kick in” because the driver did not have the “proper insurance” to begin with and, consequently, Uber and its insurance company are not responsible.
Therefore, from the moment they sign the contract with Uber, UberX drivers are technically in contract breach if they do not have commercial liability coverage.
This puts the public at-risk and UberX drivers in a position of tremendous personal liability not covered by insurance.
So riddle me this: What explains why Chicago or any other big city would allow a company to make millions of dollars through an illegal taxi scheme using thousands of unlicensed drivers in old, unsafe vehicles who are not carrying the primary insurance coverage necessary to protect the public in the case of an accident?
Al Capone could probably tell you.