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The taxi trade is appealing to the government to introduce an insurance surcharge for rides. Photo: Jonathan Wong

Hong Kong residents face paying HK$6 more for each taxi ride under industry’s insurance surcharge application

  • Drivers argue the increase is needed to cover premiums that have risen by nearly a third this year
  • Transport Department and Insurance Authority say they are in talks with all stakeholders

Hong Kong residents could soon be paying HK$6 (US$0.77) more for each taxi ride if the industry’s application for an insurance surcharge is approved.

The taxi trade says it has no choice but to demand the fare bump to cover the rising cost of premiums, two years after making a similar bid for the right to increase charges.

The latest application was filed on Monday even with passenger numbers falling during the Covid-19 pandemic, but industry representatives dismissed concerns that the move could further deter Hongkongers from taking cabs.

Currently, the flag-fall charge for red taxis serving urban Kowloon and Hong Kong Island is HK$24, compared with HK$20.5 for green taxis in the New Territories and HK$19 on blue taxis on Lantau Island.

For Hong Kong cabbies, Covid-19 brings financial pain and infection risks

The sector applied to the Transport Department in 2018 to raise the base charge by HK$6 for red and green taxis, and HK$7 for blue cabs, but is still waiting for approval from the government.

In a letter to the government on Monday, 28 taxi associations lamented the stalling of the first application, saying they were left with no choice but to also apply for the surcharge given rising insurance costs.

“We hope the government can treat this as a special case and approve our application within a month,” said Chau Kwok-keung of the Hong Kong Taxi and Public Light Bus Association Limited, one of the signatories.

Chau said that the request for the insurance surcharge would be cancelled if officials approved the earlier bid to raise the fixed initial charge.

Based on government figures covering the first three quarters of 2019, the average cost of comprehensive insurance premiums for taxis was HK$27,218 last year, 7 per cent up on 2018.

Taxi drivers waiting for passengers in Causeway Bay. The average number of Hong Kong taxi passengers a day dropped to 620,500 in July this year, when the city was in its third wave of Covid-19 infections, from about 859,600 in the same month in 2019. Photo: Edmond So

That figure surged to about HK$40,000 this year, greatly increasing the burden on taxi owners, according to Chau. Additional insurance charges also included third party premiums, which he said had also increased significantly.

“The taxi industry has already been hard hit during the Covid-19 pandemic, as the number of [passengers] dropped significantly,” Chau added.

“But our application this time is not based on the pandemic itself, rather how we can cope with the spike in insurance costs.”

According to official figures, the average number of taxi passengers a day dropped to 620,500 in July this year, when the city was in its third wave of Covid-19 infections, from about 859,600 in the same month in 2019.

The base charge for taxis in urban Hong Kong is HK$24, but could rise to HK$30 under two separate, but similar, applications. Photo: SCMP

Chau said industry representatives met officials from the Transport Department, police force and Insurance Authority last week to discuss the matter, but did not come to any conclusions.

“We hope citizens can understand that our application is reasonable. Even if they talk about considering taking fewer taxis, I believe they won’t do so in the end.”

Uber, taxis struggling in Hong Kong as people stay off the streets

Law Siu-hung, chairman of the International Professional Insurance Consultants Association, said increased coverage charges for taxis in recent years could be a result of insurance companies being more stretched, for reasons such as a higher prevalence of taxi-related accidents.

He said there were fewer than 10 insurance companies providing services for taxis. With less competition, one company levying higher bills could see rivals quickly follow suit.

Hong Kong’s government has decided to formally withdraw a bill that would have upgraded the city’s taxi services by introducing a new class of premium taxi. Photo: Nora Tam

A spokesman from the Transport Department confirmed on Monday it had received the application for taxis to impose an insurance surcharge.

“We will continue to communicate with the taxi industry as well as other stakeholders, and pay close attention to the sector’s operation,” he said.

The Insurance Authority said it was in close communication with the relevant sectors, lawmakers and other stakeholders “to understand the roots of the problems faced by the taxi insurance sector, as well as the taxi industry, and to explore viable solutions in a collective manner”.

“Among other things, the level of insurance premium reflects the claims experience, as well as the underlying risk exposure of the taxi sector, which in turn was adversely affected by a number of factors such as champerty and fraudulent claims,” an authority spokeswoman said.

Plan for premium taxis ditched after lawmakers decide they don’t have the time

Separately, the government on Monday decided to formally withdraw a bill that would have upgraded the city’s taxi services by introducing a new class of premium taxi.

As well as division among lawmakers, the administration cited the latest economic situation for shelving the draft legislation.

The new law would have introduced up to 600 premium taxis, operated under three franchises, with electronic payments, Wi-fi and phone-charging ports, and fares 50 per cent higher than standard cabs.