Ithaca’s car-sharing service is at risk of being shut down due to an insurance regulation that only exists in New York state. The regulation prohibits risk retention groups from providing auto insurance in New York unless they are located in the state.
Ithaca car-share is the only non-profit car-sharing service in the state and has been working in the community since it started with just six cars in 2008. Since then, the organization has grown to a fleet of 30 vehicles that are shared among more than 1,500 members of the community in an effort to reduce emissions caused by the use of personal vehicles.
Ithaca Car-Share director Liz Field told the Ithaca Times that the city’s car-sharing service is at risk of closing because the insurance groups, called Risk Retention Groups, have been blocked by the New York State Department of Financial Services. York and cannot write insurance for car-sharing nonprofits — even though federal law allows risk retention groups to write insurance in any other state, including Washington.
These risk retention groups can bring various nonprofits together to write affordable and comprehensive auto insurance. Given the name, these groups tend to take riskier forms of insurance. Field said Ithaca Car-Share is looking to obtain insurance through a Vermont-based risk retention group. According to Field, it is the only group that provides auto insurance for nonprofits. “They’re willing to provide us with insurance, but because of this regulation they can’t,” Field said.
According to the New York State Department of Financial Services, “a risk retention group that is incorporated in New York but not chartered or licensed in New York is not an “insurer duly authorized to transact business in this state,” and therefore, an insurance policy issued by RRG would not satisfy the financial responsibility requirements of the New York City Vehicle and Traffic Law.”
Since 2008, Ithaca Car-Share has worked with a private insurance company to meet the minimum liability insurance required by state law. However, that company is pulling out of the car-sharing market entirely, and the insurance it provides to Ithaca Car-Share will end on May 22, 2023.
Field says Ithaca Carshare and other car-sharing services in New York will struggle to find affordable insurance after this spring if the state doesn’t allow risk retention groups to write insurance for car-sharing nonprofits. In fact, even if the state makes that policy change, Field said, “there will probably be a period of time where we don’t have insurance and we’ll have to stop operations.”
According to Field, “it’s not like these risk retention groups can just write policy for us, there’s a whole process to that.” She went on to say, “they’re going to be able to do something, but they’re also on a unique timeline— so I’m not sure how long it will take before they can write a policy.”
She also said other car-sharing services in the state have expressed interest in becoming nonprofits, but have been unsuccessful because they would not be able to obtain insurance as a nonprofit under current state regulations. These services are based in Albany, Buffalo and Rochester and currently source their cars, insurance and technology through a California-based tech company that is launching car-sharing services across the country.
These services have expressed interest in adopting the nonprofit car-sharing model that works in Ithaca, as nonprofits’ missions often focus on the local community more than a national tech company.
As a result, New York State Assemblywoman Anna In whom is introducing a bill that would allow risk retention groups to write auto insurance for nonprofits. The Executive Director of the Center for Public Transport, Jennifer Dotson traveled to Albany on Tuesday, March 28, to participate in a day of advocacy to pressure lawmakers to support In whom‘ bill.
According to the deputy In whomthe bill “authorizes certain policies issued by risk retention groups not chartered in this state with a minimum of $15 million in excess and which exclusively insures not profit organizations that are incorporated in this state.”
The state Legislature has until June 8 to pass the bill, then Gov. Cathy Hochul will have 10 days to sign it or veto it.
“We hope that the text of the bill will be passed as part of the state budget or, failing that, on its own, in time to prevent Ithaca Carshare from closing in May.” If passed, it would also pave the way for other car-sharing shares in New York City to transition to a for-profit model and pave the way for other for-profit car-sharing shares to start operating,” Field said.
Over the next three years, Ithaca Carshare is slated to receive $315,000 from New York State Energy Research and Development (NYSERDA) to purchase 9 electric vehicles, several of which will be placed in low-income neighborhoods. Unfortunately, the organization won’t be able to do any of that, and NYSERDA’s money will go down the drain if they can’t get auto insurance this year.
If Ithaca car-share goes out of business, it could also be a blow to Ithaca’s Green New Deal goals due to the fact that community-based, nonprofit car-sharing reduces carbon emissions and traffic.
For more information, please visit IthacaCarShare.org