There was a time when New York City’s streets were dominated by yellow taxis—weaving through traffic and honking their way across the avenues—embodying the city’s frenetic energy. Hailing a cab was an art perfected by native New Yorkers—hand raised high, eyes scanning the horizon. Then, came the ride-hail revolution. With the tap of a button, Uber and Lyft transformed how New Yorkers moved. Whether you were in SoHo, Park Slope or Astoria, a ride you can request from an app was just minutes away.
The rapid expansion of the ride-hail market brought significant challenges—not only for the taxi industry, but also for the commercial-car insurance sector. American Transit Insurance Co., once a leading insurer of yellow cabs, black cars and ride-hail vehicles, is under severe financial distress, throwing New York City’s commercial ride-hail market into disarray. Approximately, 72,000 of the existing 114,000 NYC’s TLC liability policies belong to ATIC. What led to the downfall of such a major player, and how will this crisis reshape New York City’s commercial-car insurance market?
Why American Transit is crumbling
American Transit’s woes were not sudden: they were the result of long-standing financial mismanagement. The company struggled to remain profitable as claims surged, reserves dwindled and operating costs soared. Signs of insolvency were present for decades.
In 1979, ATIC’s reserves were first flagged as deficient, marking the start of a long financial decline. By 1986, the then New York State Insurance Department found the company insolvent by $6.2 million—which grew to $39.9 million by 1989. The insolvency worsened over the years, swelling to $79.3 million by 1997, $139.8 million by 2007, $254.4 million by 2013, and skyrocketing to $665 million by 2023. Despite repeated efforts by the New York State Department of Financial Services to compel ATIC to address its insolvency—including court proceedings and voluntary agreements to secure additional capital—the company consistently failed to achieve financial stability.
In February 2024, ATIC submitted a remediation plan, but the DFS found it lacking the necessary measures to restore solvency. If ATIC cannot resolve its financial issues, it may be placed under a receiver for rehabilitation or liquidation, with the New York Guaranty Fund stepping in to cover claims within certain limits.
Uber Technologies v. ATIC
Exacerbating ATIC’s troubles, the company has been embroiled in a high-profile lawsuit with Uber Technologies Inc., over its handling of auto liability claims for Uber drivers in New York City. In Uber Technologies Inc. v. American Transit Insurance Co., Uber accuses ATIC of failing to provide defense and indemnification in lawsuits involving accidents with its drivers—leaving Uber to cover legal costs and settlements.
Uber claims that ATIC mishandled claims, resulting in 23 lawsuits holding Uber liable between 2016-23. However, ATIC denies any obligation to cover Uber, arguing that Uber was not listed as an insured under the drivers’ policies and violated policy terms by failing to notify ATIC of claims in a timely manner. Uber seeks a declaratory judgment that ATIC must defend and indemnify it, along with monetary damages for breach of contract.
This legal battle highlights another layer of ATIC’s mismanagement and the mounting pressures it faces.
The impact on the City’s commercial car market
The potential collapse of ATIC could leave a significant void in New York City’s commercial transportation industry—particularly affecting yellow cab, black car, Uber and Lyft drivers. With ATIC controlling 63% of the commercial-car insurance market, drivers could face fewer coverage options. Many will have to turn to other carriers, such as Hereford, with 21% market share, Affirmative Direct with 6%, Accident Fund with 4%, and Maya Assurance Co., with 3%: Maya Assurance also recently announced plans to scale back operations in New York City, according to Insurance Insider US.
If ATIC does exit the marketplace, it is expected to drive up insurance premiums, as remaining insurers account for the increased risk. Independent drivers—already facing high operating costs like maintenance, fuel, tolls and parking—now will contend with rising insurance premiums, potentially threatening their ability to stay on the road.
The future of the City’s commercial insurance market
As New York City’s commercial-car insurance market evolves, New York City Councilmember Carmen De La Rosa has introduced a bill that would reduce the state minimum personal injury protection coverage for commercial ride-hail vehicles from $200,000 to $50,000, aligning New York City’s requirements with the rest of the state. With protections in place for Black Car Fund and yellow taxi drivers, this proposal would standardize the system without compromising safety.
The collapse of ATIC underscores the need for reforms, as rising premiums and shrinking coverage options demand regulatory adaptation.
While De La Rosa’s proposal would be a crucial first step, long-term solutions will require collaboration to build a sustainable insurance framework that responds to industry changes.
ATIC’s downfall emphasizes the need for proactive oversight and a flexible insurance model to maintain market stability.
Theophilus Alexander
Theophilus W. Alexander joined PIA Northeast as a government & industry affairs specialist for the Government & Industry Affairs Department in 2023. Prior to joining PIA, Theo had served in both houses of the New York State Legislature. Previously, he worked as a legislative analyst for Hon. New York State Sen. Samra G. Brouk, D-55, and he served at the New York State Assembly, as a policy analyst with New York Assembly Program & Counsel. Theo received his Bachelor of Arts degree in Politics from Ithaca College in Ithaca, N.Y.
