Following is a question by the Hon Frankie Yick and a written reply by the Acting Secretary for Transport and Logistics, Mr Liu Chun-san, in the Legislative Council today (December 14):
Question:
Some members of the taxi trade have indicated that since the incident of termination of insurance policies by Target Insurance Company Limited, insurance premiums for taxis have doubled. Insurance companies have even increased the amounts specified in insurance contracts to be paid by insured persons for contributing towards insurance compensation (commonly known as "insurance excess") for different reasons, such as high vehicle age and elderly drivers of taxis, leading to a surge in taxi operating costs. As a result, some taxi owners would rather leave their taxis idle due to their inability to afford high insurance premiums. Regarding the support for the taxi trade, will the Government inform this Council:
(1) of the respective average amounts of comprehensive insurance premiums and third party risks insurance premiums for taxis, as well as the rates of changes of such premiums, in each of the past three years;
(2) as there are views pointing out that the Government's law enforcement efforts against insurance frauds and champerty are insufficient, and that drivers involved in traffic accidents will, regardless of whether they have been injured or not, claim to have been injured and seek medical consultation at hospitals, resulting in a continuous increase in both the number and amount of insurance claims on traffic accidents, and in turn leading to soaring insurance premiums for taxis, what measures the authorities have put in place to step up law enforcement efforts in combating insurance frauds and champerty;
(3) what measures the authorities have put in place to facilitate the lowering of insurance premiums for taxis, so as to assist the taxi trade in reducing their operating costs on insurance; and
(4) as there are views pointing out that taxi service is part of the public transport system and taxi fare adjustments have to be approved by the Government, it is incumbent upon the Government to ensure that taxi operators have room for survival, apart from reducing the insurance expenditure of the taxi trade, what measures the Government has put in place to prevent the operation of the taxi trade from not being able to make ends meet, including whether it will consider devising a "fare adjustment mechanism" for taxis, so as to ensure their financial viability and avoid affecting public transport services?
Reply:
President,
Having consulted the Security Bureau, the Financial Services and the Treasury Bureau, the Commerce and Economic Development Bureau, the Hong Kong Monetary Authority (HKMA) and the Insurance Authority (IA), our reply to Hon Frankie Yick's question is as follows:
(1) According to the information provided by the IA, the average annual premiums and rates of changes for taxi comprehensive and third party insurance for the previous three years (2019-2021) are provided in the table below:
| 2019 | 2020 | 2021 | |
| Average comprehensive insurance premiums (HK$) | 28,050 | 33,902 | 35,468 |
| Comparison with the preceding year | +9.8 per cent | +20.9 per cent | +4.6 per cent |
| Average third party insurance premiums (HK$) | 22,210 | 26,189 | 27,590 |
| Comparison with the preceding year | +7.5 per cent | +17.9 per cent | +5.3 per cent |
(2) Depending on the actual circumstances of individual cases, insurance fraud may involve offences such as "theft", "fraud", or "obtaining property by deception" under the Theft Ordinance (Cap. 210), and/or the common law offence of "conspiracy to defraud", with maximum penalties of 10 to 14 years of imprisonment.
The Police have been conducting professional investigation into insurance fraud, including the establishment of a task force under the Commercial Crime Bureau to monitor emerging trends of organised fraud cases, and conduct targeted investigation and analysis. The Police have also maintained close liaison with other government departments, the IA and stakeholders (such as the Hong Kong Federation of Insurers), while at the same time enhanced intelligence gathering for intelligence-led operations. On publicity and education, the Police have disseminated information on the latest modus operandi of various common fraud cases and anti-deception messages via different media platforms, including online platforms and traditional media. The Police have also set up the Anti-Deception Coordination Centre's "Anti-Scam Helpline 18222" to provide 24-hour timely assistance to the public.
"Maintenance" and "Champerty" are common law offences that are punishable by a fine and up to seven years' imprisonment. Those injured in accidents who wish to pursue legal claims should seek professional legal advice, or seek assistance from the Law Society of Hong Kong or the relevant government departments such as the Legal Aid Department, the Labour Department and the Social Welfare Department.
(3) The Government is highly concerned about the problems encountered by the taxi trade when taking out insurance and has been maintaining close communication with the taxi and insurance trades in this regard. In terms of taxi insurance, insurers underwrite and determine premium level based on commercial principles, taking into account key factors such as accident rates, accident severity, past claim records, etc. In fact, the premium level as determined by insurers should accurately reflect the risks associated with the underwriting of taxi businesses. However, according to the information provided by the IA, taxi insurance business has recorded underwriting losses in nine out of the previous 15 years (i.e. 2007 to 2021). This reveals a misalignment of risks and premium level, which is not beneficial to the sustainable development of the market in the long run.
To suitably address the issue of taxi insurance premium level and to attract more insurers to join the market, we consider it necessary to tackle the problems at source by improving the safety standard of taxis and encouraging taxi owners/companies to adopt technology (such as Anti-collision Warning, Lane Keeping Warning, etc.) to improve driving safety and hire drivers with satisfactory driving records with a view to reducing traffic accidents and amount of claims. In addition, assisting insurers in adopting measures to enhance risk differentiation, for instance, encouraging taxi owners/companies to provide insurers with information such as traffic offence records of the taxi drivers, could facilitate the insurers to make underwriting decisions and set premium for individual policies more accurately.
The Government has earlier proposed to introduce a Taxi Fleet Management Regime (Regime), under which existing taxis may form a fleet and apply to the Transport Department (TD) for a Taxi Operator Fleet Licence. The proposed Regime could encourage the trade to adopt professional fleet management, which is conducive to better maintenance and management of the taxis under the fleet, as well as more effective management of the performance and quality of taxi drivers. The Regime could also help encourage the taxi trade to adopt technology to reduce traffic accidents and attract operators who are more amenable to adopting modern management tools to provide taxi services, thereby enhancing taxi service quality and safety. The Government is formulating the details of the relevant regulatory framework and will submit them to the Legislative Council for scrutiny in due course.
The Government also welcomes the introduction of new driver assistance systems by vehicle manufacturers for various classes of vehicles for enhancing driving and road safety. It is understood that a taxi supplier is actively preparing to introduce in Hong Kong a new taxi model equipped with system that could prevent traffic accidents. The TD will continue to maintain close communication with the taxi trade and follow-up on the progress. At the same time, the TD will continue to collaborate with the Police to enhance drivers' awareness of safe driving through regulation, enforcement, publicity and education with a view to reducing traffic accidents.
(4) The Government has been closely monitoring taxi operation and adopting different measures to alleviate the operational difficulties of the taxi trade. According to the established taxi fares adjustment mechanism, the Government considers the fare increase applications in accordance with several key criteria, including changes in revenue and operating costs of taxis since last fare increase, impact of the proposed fares on the supply of taxi services, public acceptability of the proposed fares, whether the proposed fares could maintain a reasonable fare differential between taxis and other public transport modes, etc. Having regard to the increasing operating costs of taxis as well as lower meter revenue and rental revenue due to the pandemic, the Chief Executive in Council has earlier approved the taxi fare adjustments. The new taxi fares have been implemented since July 17, 2022, which will help improve the financial viability of taxi operation.
In addition, in view of the impact of the COVID-19 pandemic on the local passenger transport sector, the Government has introduced a series of relief measures under several rounds of the Anti-Epidemic Fund since 2020 to provide financial support (including one-off non-accountable subsidies and fuel subsidies) for the transport sector (including taxi trade) to tide them over the hardship.
Meanwhile, the HKMA and the banking sector decided in October 2022 to further extend the Pre-approved Principal Payment Holiday Scheme to end‑July 2023. In response to the challenges faced by the taxi industry, the HKMA and the banking sector have also introduced a number of relief measures, such as providing greater flexibility in handling new financing applications for the purchase of new vehicles for taxi operators, and handling requests for principal payment holiday and extension for taxi loans taken out by personal customers based on prudent risk management principles. The HKMA also continues to encourage banks to actively consider extending the maximum loan tenors for existing taxi loans to 30 years having regard to the circumstances of individual borrowers. At the same time, the application period of the principal moratorium under the SME Financing Guarantee Scheme has also been extended to end-June 2023, with the maximum duration up to 42 months. The above schemes would help the taxi operators to cope with liquidity pressure and improve their financial position.
With the relaxation of the compulsory quarantine requirements on arrivals and the social distancing measures by the Government, the patronage of most public transport modes has been resuming. We believe that the business of the taxi operators will improve gradually.
Ends/Wednesday, December 14, 2022
Issued at HKT 14:50