From Uber to robotaxi: Rising premiums and the driverless dawn steer taxi cover trends

In May 2025, on the taxi journey home from Insurance Times’ Claims Excellence Awards, I fired the iconic cab driver ice breaker: “You been busy?”

The ensuing rally of small talk, worthy of last Sunday’s Wimbledon final, ended with the cabbie saying his insurance premium had soared while competition from ride hailing apps – such as Uber – made earning a living increasingly difficult.

That conversation now feels prophetic.

Since then, the UK government has confirmed plans to fast track pilots of self-driving taxi and bus services from spring 2026, promising 38,000 jobs and £42bn in economic value through these schemes by 2035.

So, where does this leave taxi insurance? What is the impact on cover and liability when there is no driver?

Why the meter kept ticking up

Taxi insurers are currently navigating a market under pressure.

Neil Manvell, head of motor at MGA KGM Underwriting, explained: “Costs have risen across the whole motor insurance market and taxi [insurance has] not been immune to that. You’ve got claims inflation, repair costs, labour costs – and in the taxi market, there’s greater road exposure, so a higher frequency of claims.”

Modern vehicle technology has exacerbated the issue. While features such as radar assisted braking can reduce road accidents, they also make any repairs more expensive.

Shaun Cunningham, chief executive at claims management and niche vehicle supply business Chief Vehicle Rentals, highlighted a tangible example: “A number of years ago, a windscreen was basically just a screen in a car. It now has all your radar functionality on there, so they are very expensive now.”

Electric vehicles (EVs) – often legally required in ultra low emission zones (ulez) and clean air zones if drivers do not wish to receive a fine – have added to the cost challenge. Cunningham continued: “EVs tend to be more expensive to repair and, when they go wrong, they’re more expensive to insure as a result.”

Nik Hobson, divisional head of non-standard underwriting at Markerstudy, agreed: “The increase in the number of hybrid or all electric taxis has significantly grown due to fuel costs and adherence to low omission areas. These vehicles are more costly to repair, meaning insurance costs will inevitably be higher.”

Manvell added: “Sometimes a small collision can lead to a total loss because of concerns around battery damage.”

This financial squeeze has affected how taxi insurance is priced. Hobson added: “The claims inflation seen in 2023 and 2024 has made motor insurance profitability more challenging.”

Gig economy

Traditional black cab shift patterns have been disappearing too. Ash Coakley, head of taxi insurance at Acorn Group, explained: “Ride hailing platforms like Uber, Bolt and Ola have disrupted the traditional black cab model, introducing more flexible working patterns and changing risk profiles.”

Taxi drivers now often switch between ride hailing apps and other gig economy jobs, prompting demand for usage-based insurance. “Many [drivers] now demand more flexible, on-demand insurance that aligns with their working habits,” Coakley said.

This has created a need for new insurance propositions that move away from traditional annual policies – with some insurtechs looking to step in and fill this protection gap.

David Daiches, chief operating officer at Inshur, explained his firm’s approach as an example: “Our by the minute, usage-based wallet for Amazon Flex – which charges on-demand delivery drivers based on how long they are driving for – recently surpassed a major milestone of 25 million hours covered.”

The autonomous horizon

The UK government’s technology-centric ambitions have thrust autonomy into the underwriting spotlight.

In June 2025, transport secretary Heidi Alexander revealed that companies will be able to pilot small scale autonomous taxi and bus services without a safety driver from spring 2026, with members of the public booking their rides via an app. If these pilots prove successful, then a potential wider rollout would be implemented in line with the Automated Vehicles Act becoming law from the second half of 2027.

This prospect of a driverless future has forced a fundamental rethink of risk, accelerating insurance linked conversations from the hypothetical to the practical.

Daiches supported the government’s move: “We’re fully in support of the government’s plan to begin piloting commercial self-driving taxis next year.

“Only a couple of decades ago, everyone still owned a landline phone, just as mobile phones were exploding in popularity. Similarly, the next few years will see a hybrid situation on our roads, where human driven and autonomous vehicles exist side by side.”

Yet unanswered insurance questions abound around this technological development.

This crossover period around increasing autonomous vehicles on British roads raises a core issue around insurance liability. “‘The liability question, is key. I’m not sure the risks of autonomous taxis are fully understood by the industry at this point, or that enough real-world mileage has been undertaken to yet form a complete view,’ says Hobson.

Furthermore, claims severity could spike even if frequency falls, Daiches predicted: “Because autonomous vehicles are generally much more expensive, we’ll likely see lower frequency but higher severity when it comes to claims.”

Will passengers hail a robotaxi?

Cunningham believes public confidence in autonomous vehicles cannot be assumed, however. He said: “Would you get in a driverless taxi? I still think taxi drivers give you that extra comfort.”

Coakley also expected a long tail for traditional cover: “We believe there will always be a need for human-centric cover, particularly in niche and non-standard segments where technology alone is not enough and personal service is valued highly.”

Insurers that remain in the taxi sector are sharpening segmentation as a result of these market developments, using real-time telematics, trip volume data and granular regional loss trends as essential underwriting tools.

“One of the biggest challenges is managing an increasingly mixed risk pool,” Coakley continued.

In today’s taxi insurance marketplace, uncertainty is the only constant. Cunningham concluded: “You don’t have a crystal ball – if you look back at how the taxi industry was 10 years ago, five years ago, it is different.