Every year one story involving insurance seems to capture thepublic's attention and this year that story was ridesharing.

The popularity of commercial ridesharing, which connects driversand riders for a fare with the click of a button on a smartphoneapp, has skyrocketed across the country in recent years. However,transportation network companies like Uber and Lyft have not only“disrupted” the taxi's traditional drive-for-hire business model,but have also presented challenges for policymakers and insurerswho have a vested interest in protecting the public.

The story that emerged this year had its roots in regulationspassed by the California Public Utility Commission in the fall of2013 and really emerged into public view New Years' Eve when adriver for Uber struck and killed a 6-year-old in San Francisco.Since then, as the transportation network companies expanded theiroperations across the country, controversy, cease-and-desistorders, fines for operating without a license, and legislative andregulatory battles have followed.

The narratives involved were quite simple: “upstart tech firmsfight cumbersome regulations that stifle innovation and jobs,”“taxis seek level playing field regarding regulations,”“marketplace innovation is great, but the vehicles used inridesharing services must be properly insured to protect thepublic.” The TNCs marshalled celebrity investors, a loyal customerbase and everyday people who drive for the services to convincepolicymakers their operations were different from taxis. Meanwhile,the taxis relied on their army of drivers and experience navigatingregulatory avenues to preserve their business model. Sometimes lostin the heat of battle over whether TNCs should be subject to thesame regulations as taxis are important insurance implications thatneed to be addressed. However, the insurance industry diligentlyworked to keep consumer protection front and center.

Faced with the competing interests, city after city, state afterstate has struggled to find the best way to balance regulations andensure adequate consumer protections. Because there is very littlein statute dealing with TNCs, the National Association of InsuranceCommissioners (NAIC) and more than 20 state insurance departmentsand public service commissions have issued consumer alerts oradvisories highlighting the potential insurance gaps in coveragefor TNC activity and encouraging TNC drivers to talk with theirinsurers to understand their exposure.

State legislatures including Arizona, California, Colorado,Connecticut, District of Columbia, Florida, Georgia, Illinois,Maryland, North Carolina, New Jersey, Oklahoma, Pennsylvania, RhodeIsland, Virginia and Washington have considered legislation.

Most recently, California lawmakers sent Gov. Jerry Brownlegislation (AB 2293) which is a well-balanced bill providingpublic protection by establishing reasonable insurance limits andcreating a firewall that protects personal auto insurance fromsubsidizing commercial activities. AB 2293 gives TNCs flexibilityto meet insurance requirements, which led to Uber and Lyft tosupport the legislation.

On the other hand, Illinois Gov. Pat Quinn vetoed legislationthat would have provided a uniform statewide approach to insuranceissues and consumer protections. Groups such as the IllinoisInsurance Association and the Property Casualty InsurersAssociation of America expressed disappointment by the veto becausethe legislation offered clear insurance rules that would not leavepolicyholders or accident victims in the lurch because of coveragedisputes. The bills also would have helped to avoid the creation ofa confusing and costly patchwork of local regulations

Earlier this year, Arizona Gov. Jan Brewer vetoed H.B. 2262,which would have forced personal auto insurers to cover the riskierdriving behavior of TNC drivers. Colorado Gov. John Hickenloopersigned legislation that sets up the framework for TNCs to provideprimary insurance coverage for all commercial activity, includingwhen drivers log onto their app and are available for hire throughthe time period when they have a passenger in the vehicle until thedriver logs off the app and is no longer available to acceptrides.

Many states that did not act in 2014 are gearing up forlegislative activity in 2015. Studies were called for inConnecticut and North Carolina, bills have been filed inPennsylvania and New Jersey, interim legislative committee hearingsare going in Nebraska and Kentucky. Lawmakers across the countryare discussing the developments that have occurred in 2014 with aneye on legislative action next session.

Over the year, the landscape involving TNCs and insurance hasevolved as they have accepted more responsibility in providinginsurance coverage. However, there are still some insurance gapsand the potential for disputes that the insurance industry wantsaddressed. PCI and our industry partners continue to work at thestate and local level to support the development of solidguidelines so there is clarity regarding what insurance coverage isbeing provided and when it is in effect.

This year there were also new developments with the “hot issue”of 2013: e-Cards, or electronic proof of insurance. The expansionof states that permit drivers to use their smartphones to displaytheir insurance card continued. The trend of states modernizingtheir insurance laws has advanced quickly. In 2011, no statesallowed drivers to use their cell phone to show proof of insurancein a traffic stop. This year, Delaware, Maryland, Rhode Island,South Carolina and South Dakota enacted e-card legislation andtoday more than two-thirds of the states have enacted laws oradopted regulations.

More states also passed legislation that would enable insurersto conduct all policyholder transactions over the Internet with theconsumer's consent. The bills generally allow consumers to viewtheir policy documents and information online instead of receivingthem through the mail. We live in a world where increasinglyeverything is paperless, and giving the consumer the option toreview or renew their policies online gives consumers moreflexibility and choice. Modernizing the insurance marketplacebenefits consumers and allows insurers to meet the increased demandby consumers who want to do business electronically. In 2014Indiana, Iowa, South Dakota, Utah, and Wyoming enacted this type oflegislation. There are now 18 states that allow electronic deliveryof documents and notices.

The other major e-commerce issues, electronic delivery ofinsurance information, also experienced gains. In 2014 Arkansas,Indiana, Iowa, Maryland, Oregon, South Dakota and Wyoming enactedthis type of legislation that allows electronic delivery ofdocuments and notices. Now, nearly half (24) of the states haveadopted legislation that enables insurers to conduct allpolicyholder transactions over the internet with the consumer'sconsent.