Taxicabs are primarily non-employer enterprises. According to MarketStance, there were over 63,000 independent taxicab operators in 2009. They generated over $107 million in premium. The 2,054 small enterprises accounted for nearly twice as much premium as the independent operators, and the 44 middle market accounts generated almost $150 million.

Most of the premium is commercial automobile, but property, general liability, and inland marine lines are also represented. Workers compensation generates the second highest premium (except for independent operators who do not carry it).

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Speed is at the heart of this industry. The first taxi that makes it to a spot gets the passenger. The passenger, often in a hurry to get to the destination, also rewards speed. The driver also knows that more fares mean more income.

Unfortunately, speed and caution rarely coexist.

Here is a possible loss scenario:

Christopher has eight fares for the day and needs two more to meet his quota. He picked up Mary and her mother at their home and got them to their destination. Mary paid her fare and is helping her mother out of the taxi when Christopher suddenly spots a fare waving at the corner and quickly takes off to grab it. Unfortunately, Mary's mother had not completely exited the taxi and is thrown onto the sidewalk.

The ambulance takes Mary and her mother to the hospital. Mary calls her attorney.

There is a very active market for taxicab business. Andy Jaz, director of the taxi program at Markel Corp., explains, "There is a very select market of perhaps six or seven companies, but new competition is always coming and going."

Markel, Scottsdale, National Casualty, National Indemnity, Essex, Evanston, Starnet, Canal, and Sparta are markets our experts use.

"Because of the prolonged soft market, we've seen some carriers with a B rating that have reached out and considered classes that they didn't historically write," according to Rebecca l. McNabb, transportation manager at Burns & Wilcox. "I can offer an account coverage with an A rated carrier and explain that this is a financially stable company that will be in it for the long haul, but if the account can find cheaper coverage with a B rated carrier, they'll opt for that."

Robert Alkire, senior vice president at 5Star Specialty Programs, a division of Crump Insurance Services, Inc., agrees. He says, "It seems like capacity has increased over the past year. The market is still very competitive, and pricing is also highly competitive."

"Several new carriers entered the marketplace within the past three years that increased competition and drove the pricing down," says Mark A. Iverson, vice president at AmWINS Transportation Underwriters, Inc. "This negatively affected this class of business, caused loss ratios to turn poor, and made placing those risks difficult."

The primary coverage for taxicabs is automobile liability. The main reason this coverage is necessary is that a taxi cannot operate without valid liability coverage. Municipalities regulate taxicabs. In addition to setting requirements for coverage, municipalities also establish minimum levels of coverage.

According to Ms. McNabb, "Because of the economy, many taxi accounts are looking for the cheapest solution, and they're probably going to buy the lowest limit their contract allows. The relatively low liability limit may be inadequate and, if the driver is an owner-operator with just one vehicle and few assets, the injured person might win a lawsuit but still end up with nothing."

However, Mr. Iverson notes, "More airports and other municipalities are requiring higher limits of liability."

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