Four insurers have stepped in to help more than 11,000 taxi owners who face being left without coverage after the industry’s biggest provider terminated their annual policies with only one week’s notice.

The four insurance companies are Bank of China Group Insurance, China Pacific Insurance (HK), China Taiping Insurance (HK) and CMB Wing Lung Insurance, according to the Insurance Authority.

The decision came as Target Insurance, which provides coverage for more than 60 per cent of the taxi industry, issued letters to over 11,000 drivers telling them that their annual policies would be terminated after one week’s notice with a repayment of the remaining premium, a source told the Post.

The city currently has 18,163 licensed taxis.

Cheng Hak-wo, honorary life president of the Taxi Dealers & Owners Association, said drivers had been receiving the letters recently and were living in fear of being forced to cease operations because of no insurance coverage.

“The affected taxi owners are now in distress over finding a new insurer. They are very afraid that they can’t get insurance coverage for their cabs and that after one week they can’t do any business,” he said.

Despite the four insurance providers bailing out the troubled taxi owners, Cheng said drivers would face cash-flow problems as they needed to pay over HK$40,000 (US$5,131) for a new policy without knowing when they could get their premium reimbursements from Target Insurance.

“Everything is uncertain as there is no guarantee they can get insured,” said the taxi association president, adding drivers would need to pay “an extra sum of money to cope with the soaring new premiums”.

A spokeswoman for the Insurance Authority said that under the current exceptional circumstances, the relevant parties would provide 30 days of insurance protection for affected policyholders to ensure continuous coverage despite the cancellation of their existing agreements.

“To ensure smooth operation of the market and avoid disturbance to the taxi industry and the commuting public, the Insurance Authority has been engaging the Hong Kong Federation of Insurers and other insurers with relevant experience to formulate plans for taxi owners to transfer their policies to other insurers in an orderly manner,” she said.

However, Cheng accused the authority of not doing enough to ensure sufficient insurance coverage for the taxi sector, saying it should not have allowed providers to give only one week’s notice before terminating policies.

“The Insurance Authority has not done anything to safeguard our rights to have insurance coverage, and help us get out of this predicament,” he said. “It should coordinate with other insurers to ensure that they take over the policies from Target Insurance and save us the trouble of getting a new insurer.”

Hong Kong taxi insurance providers have recorded heavy losses in recent years, with motor policy premiums calculated by assessing risks such as a vehicle’s accident rate and claims for damages.

The Insurance Authority said that for 10 of 15 years up until 2019, the taxi insurance business had accumulated underwritten losses totalling HK$323 million in total.

Average annual premiums grew by more than a fifth from HK$28,050 in 2019 to HK$33,902 in 2020. A record premium of almost HK$150,000 was slapped on a taxi last year after it was involved in an accident and its owner was fined HK$1,000 for careless driving.

The number of accidents involving taxis rose from 3,916 in 2018 to 4,198 in 2019, before declining to 3,408 in 2020 during the Covid-19 pandemic, according to official data.