From black cabs lining up along the Mall in a striking tribute to the Queen, to London cabbies transporting veterans free of charge to Remembrance Day services, commercial taxis are a fundamental part of British life, and a significant contributor to the UK’s economy.
But despite its position as a national institution, the UK’s taxi industry has endured its most challenging period in living memory. The Covid-19 pandemic hit taxi and private hire companies hard – with lockdowns seeing business drop by as much as two thirds. Taxi drivers faced real danger every day (drivers suffered the highest proportion of deaths per 100,000 during the pandemic) as having to navigate the economic effects of Brexit and a looming recession.
However, even in the face of significant challenges, the taxi industry is characterised by tenacity and the ability to bounce back. And, over the last twelve months, we’ve seen a market that’s not only primed for recovery, but which is also committed to innovation and diversification – driving the progress that’s needed to shore up a bright future for taxi drivers and firms across the country.
At ERS, our team of expert underwriters have been delivering services to the industry for more than 25 years. We understand taxi risks inside and out and provide tailored cover single and multi-vehicle risks.
2022 - A year in review
Positive news rang out at the start of the year, as lockdowns ended, and private hire firms started to see a recovery in work. However, their attempts to rebuild after Covid-19 were significantly hampered by a nationwide shortage of drivers. As well as drivers leaving the industry in droves, thanks to the pandemic, the effects of Brexit were also starting to be felt. Worryingly, it was noted in January that the shortfall was as much as 40 per cent and was consistent across the UK - presenting serious challenges to businesses looking to get back to pre-pandemic levels of service.
Since then, the Government and industry alike have been working to overcome the issues – and have delivered remedies such as slashing licencing costs as well as encouraging more diversity in the profession (currently a low proportion of taxi drivers working on the UK’s roads are female, suggesting that there needs to be a bigger effort made to encourage women into the sector).
Diversification has also been the watchword of 2022 – as, during and following the pandemic, taxi drivers and the firms they work for, realised that they needed to vary their offering in order maintain income. Providing courier services, delivering goods or helping with patient transport for the NHS not only kept the industry going, but also meant the taxi industry was a vital part of supporting the UK more widely.
Taxi firms being an integral part of the community is nothing new, but over the last year, we’ve seen many more examples of companies dealing with the downturn by embarking on initiatives to support their local communities. A great example of this is the Magical Taxi Tour, an opportunity for disabled children and those with life limiting conditions to travel to Disneyland – in cabs - in convoy. This trip was supported by ERS, which provided insurance cover free of charge, and has paved the way for other, similar, initiatives.
Innovation in technology has also driven the ability of cab firms, and individual drivers, to diversify their services. A good example of this in practice is cabbie Danny Mitchell’s creation, Envoy, a courier app that connects under-used drivers with businesses needing delivery.
Indeed, the pandemic proved to be the impetus his idea needed. With increasing demand in the ride-hailing market and the pandemic fuelled downturn in demand, location technology is allowing apps like Envoy to give drivers a plan B during times of uncertainty, as well as providing an essential service to businesses and the wider community.
A look ahead to 2023
The good news is that, during 2022, following a period of stagnation, we’ve seen demand for taxi services return to near normal. The latest Government figures confirm that more than 260,700 licensed public and private hire taxis are currently on UK roads, an increase of 3.8 per cent on 2021 and evidence that the trials and tribulations of the pandemic are now in the rear-view mirror.
And, while the data suggests that London is leading the resurgence, the demand we’re seeing for taxi cover is nationwide and greatly exceeds our projections. It’s a positive development, and a cause for plenty of optimism.
It seems as though the worst of the driver shortage is over too, as the industry becomes increasingly attractive to drivers. Because demand is still recovering, they have greater control over the hours that they work, allowing them the flexibility they want.
Indeed, based on 2022 activity, we’re likely to see the market further grow in the year ahead. And while there will undoubtedly be some challenges in terms of meeting demand, we’re also likely to see more vehicles being badged and more drivers either entering or returning to the market.
One of the primary factors fuelling the market's growth is the increased usage of online cab booking platforms, primarily because of the convenience they provide to clients. They also offer simple online payment options and the flexibility of choosing the pick-up and drop-off locations.
The rise of eco-friendly electric cab services will also likely provide an attractive potential for market expansion throughout the calendar year ahead.
However, despite this much needed light on the horizon, there are still plenty of challenges to be overcome, not least stubborn inflation and a looming recession. When the economy is good, say experts, taxi services are in demand – but when there’s less disposable income to be had, demand naturally drops.
There will also be licencing complexity to be navigate. There is currently plenty of discussion around a Department of Transportation consultation from the future of licensing authorities, as well as the latest Government Levelling Up white paper, looking at whether it’s necessary to devolve more power to licensing authorities or group them together. These developments are being closely watched and considered by the team at ERS, which is committed to staying at the forefront of a developing industry.
ERS is here to support taxi firms and drivers
So, despite some challenges, the market looks bright for the taxi industry. Over the long term, we’re excited to see the taxi industry’s continued growth – driven in no small part due to increasing demand for ride-hailing and ride-sharing services, increasing demand from online taxi booking channels, and the continued ability of the industry to innovate and diversify. Compared with other modes of transportation, increasing traffic congestion and low comparatively low fares are the other major factors driving the taxi market.
ERS has been supporting the taxi industry for more than 25 years, and its team of underwriters are experts in the industry.
At ERS we are investing in updating our rating platform to improve the sophistication of our models and the speed at which we can deploy changes to market. We also provide the ability for a greater proportion of our risks to be automatically and instantly rated, which means that brokers have an improved ability to give policyholders decisions there and then, rather than needing to wait and reply at a later date.
What’s more, we’ve unified our products to make them more streamlined and effective, and, while we’re not planning wholesale changes, we’re going to continue to invest in the efficiency of our product. The Taxi product was previously comprised of four separate products: Standard Taxi, Non-Standard Taxi, Executive Taxi and Wedding Hire. These operated under separate schemes with a large proportion being written manually. The unified product has allowed us to automate all schemes, including the creation of further variants without the need to transact manually – ultimately insuring a quicker quote journey for broker and customer.
A greater proportion of our appetite is now available electronically with even more ways to trade via ERS eTrade, Plug into ERS (PIERS) and software houses. Our investments will allow us to continue to widen our distribution, open new market opportunities and allow us to deploy rate changes almost instantly.
Looking for a Commercial motor quote? The fastest way to access our A+ rated Taxi product is online via ERS eTrade. Find out more about ERS eTrade and how to sign up here.
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