Challenges Faced by Minibus and Route Taxi Owners in Barbados Demand Government Action
Bus and taxi owners in Barbados are urging the government to increase fares or provide subsidies due to rising operating costs and a potential increase in insurance rates.
Four years after gaining a 75 per cent rise in bus fares, minibus and route taxi owners are pressing the Mia Mottley administration to raise fares or subsidise the industry, claiming it is near collapse.
Chairman of the Alliance Owners of Public Transport (AOPT) Roy Raphael has warned that the rising operating costs had reached a breaking point for operators, who could go out of business if the latest “talk of increasing insurance rates” becomes reality.
“I understand that we may not be popular if we do go to the government for an increase in bus fare. But if an increase is not meted out, government would have to give us by subsidising us in somewhere or the next, because we cannot continue in this vein,” he contended in an interview with Barbados TODAY, adding that because the privately-owned public service vehicles (PSVs) cannot be granted a separate fare hike they are at a disadvantage.
“We are basically seeing an increase across the board. We ourselves cannot have an increase in bus fares, because bus fares are increased based on the government…because when the Transport Board gets an increase, we get an increase. We can’t increase our bus fare, which means that we would have to then call on the government to allow all fares to be regulated by the Fair Trading Commission (FSC) rather than the government.”
Making claims of an impending insurance rate increase, Raphael declared: “I don’t know if we can absorb any more. And I believe these insurance companies need to be controlled, and they are not being controlled by the Financial Services Commission. You just can’t raise rates like that. They are basically running us out of business.”
But the insurance industry’s chief spokesman blamed the uncontrolled behaviour of PSV drivers for pushing up both accident claims and the rates to cover them.
“I think the drivers are causing more and more accidents and cause their rates to go up,” said Randy Graham, president of the General Insurance Association of Barbados (GIAB). “If they control the accidents and control the costs, there will be no pressure on the rates. The rates are a direct relation to the number of accidents.”
He also categorically denied that insurance companies were trying to push PSV operators out of business.
“I understand Roy’s position to try to defend the sector’s position and its membership. I have no problem with that. But I for sure know that the insurance sector is not trying to push the ZRs out of business at all. I mean, everybody in Barbados feels there is a benefit to having transport in Barbados being supported by the ZR sector,” he said.
“I think the issue is that there are drivers within the ZR sector that need to exhibit more discipline. Not everybody. But some of them are causing a number of vehicular accidents on the road that are resulting in millions of dollars [in payouts]. What the sector is trying to do, is trying to get the drivers that are causing the problems to be better controlled by the owners. That doesn’t seem to be happening.
“What is being reflected is that the more accidents these guys cause, the more is being paid out by the insurance companies, the more liability is being taken on and it is all coming at a cost. And we are trying desperately to work with the association to get the drivers under better control. What the companies are saying to Roy and the team is that if you don’t get the drivers under control and they keep causing these accidents, the premiums will keep going up. It is unavoidable if you don’t control the drivers.”
Graham said the insurers have already suggested to Raphael that the PSV sector should introduce a merit-based system where people who drive PSVs have to get a special licence or special qualifications to drive.
“It should not be a simple passenger vehicle licence where you are allowed to drive PSVs,” he said.
At the same time, the general insurance sector representative played down the likelihood of any across-the-board hike in insurance premiums on PSV policies this year.
“I haven’t seen anything about any companies I come across saying that they are increasing ZR rates,” he said. “At the last meeting, what we told Roy is that the owners need to sit down with the individual companies and ask them about the rates. But there is no across-the-board increase in rates just because they are ZRs. We are not getting that from our members at all. What the members are saying is that those ZRs which continuously cause multiple accidents would have to pay higher premiums, and those who are good drivers would not pay the higher premiums. I think that is fair. No company has come out and said there is a definite increase in ZR premiums this year. You have to take it by renewal.”
However, Graham did acknowledge that insurance companies have decided to stop covering ZRs over increased accident risk.
“They could not take it on any more. Several companies still offer it, but I know there are some companies that had to stop offering the cover. Some of the companies have tried, they have insured the ZRs over the years, but it was just costing them too much. If they continued to insure ZRs, the premiums would have been so high, it would have been prohibitive,” he explained.
Raphael called on the insurers to meet with the AOPT again before introducing any new rates.
“We would have had some discussions recently with the insurance companies,” he said. “We expect to go back to the table in our discussions. We would have put some discussions on the table that they can look at. We expect to meet with them again this year. But at this moment as we speak, I don’t think that the owners of the public transport can absorb any more hike at this stage.”
While acknowledging that rates may have to go up from time to time, the AOPT chairman also admitted to the reckless behaviour of some drivers. He appealed to his members to conduct themselves on the roads in such a manner that they don’t become a liability or high risk for coverage.
“I continue to preach to the operators and owners out there about their behaviour, which gives the opportunity, basically, to the insurance companies to increase their rates,” said Raphael. “And I suspect that a number of insurance companies may not want to insure public service vehicles very shortly because of the number of complaints and high risks they bring to the insurance.”
He added that this is one of the reasons a special committee is to be set up early this year to look at insurance for public service vehicles.
With only four insurance companies providing coverage for PSVs, this number may decline even further, Raphael warned.
“And if they do, the rates will be steep,” said the PSVs’ top official. “So, I believe the insurance companies need to meet with us before they raise our rates again, having already raised our insurance last year.”
He added: “And to be honest with you, when we assess our public service vehicle operations during the last year, we have seen an increase in maintenance, particularly where the potholes are on some routes. We have seen a decrease in the number of travelling passengers. Basically, even with the gas prices [have] also increased. We have asked the prime minister to reduce the $1 000 transfer fee which is a headache to us at this stage, and nothing is happening.”
Raphael underscored that the true cost of running the PSV business during the past year is being assessed by its analysts, but observed that it had skyrocketed.
When contacted, the FSC’s Chief Executive Officer Oliver Jordan declined to respond to Raphael’s claim that the insurance sector was not properly controlled by the regulator.
Bus fares rose from $2.00 to $3.50 in April 2019, less than a year after an International Monetary Fund recommendation of a $5 fare. It was the largest increase in bus fares in 30 years, after rising 50 cents to $2.00 in January 2011.
