Ride-sharing giants Lyft Inc. and Uber Technologies Inc. seem to have found the same solution for dealing with the risks of managing millions of drivers on the road: Creating their own insurers in Hawaii.
On Friday, Lyft told potential investors in its initial public offering about its insurance unit, Pacific Valley Insurance Co. Hawaiian public records show another captive company called Aleka Insurance Inc., whose directors include Uber executive Gus Fuldner and former chief legal officer Salle Yoo.
Hawaii pitches itself to the captive industry
Captives are a large but murky part of the insurance world. Hawaii pitches itself to the captive industry on its website, boasting about low taxes and corporate-friendly laws. Lyft has tapped Marsh & McLennan Cos. to help manage Pacific Valley, while Aon Plc oversees Aleka, the filings show.
Lyft, which had about $810 million in insurance reserves, uses its unit to help bear the cost of auto incidents. Even though it also turns to outside insurers for some coverage, that subsidiary introduces volatility.
Hoping to eke out more cost savings
Higher costs from insurance claims dragged down a measure of Lyft’s profitability during the first few months of 2018. Lyft says it’s investing in its insurance program to help eke out more cost savings.
An Uber spokesman declined to comment.
Ride-sharing companies have caught the eye of other insurers. Travelers Cos. helps Lyft handle auto claim services and Allstate Corp. said last year that it partners with Uber to provide commercial auto insurance in some states.