Uber is not disclosing key information, a lawmaker says

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Uber misled California lawmakers last year before passing an insurance-related bill, a consumer advocacy group claims, prompting one lawmaker to question the company’s interactions with the Assembly’s insurance committee.

While the ride-hailing giant pushed to reduce the required insurance coverage it must carry for uninsured and underinsured motorists, Uber told lawmakers that the move Senate Bill 371 would be good for consumers as insurance costs rise. It passed, reducing Uber’s liability for uninsured and underinsured drivers from $1 million to $60,000 per person and $300,000 per accident.

But a May report by Consumer Watchdog found that the company is mostly self-insured, meaning it pays its own subsidiary insurer and builds up tax-free reserves.

Uber spokesman Zahid Arab denied the company misled lawmakers during the legislative process, saying they were “fully aware that the state’s rideshare insurance requirements are uniquely expensive and increase costs for drivers and riders.”

Consumer Watchdog examined Uber’s public financial filings and found that its subsidiary, Aleka Insurance, insures nearly 95 percent of the ride-hailing company’s risk. The group also pointed out that from 2023 to 2025, Uber’s insurance reserves — funds it sets aside for potential insurance liabilities — doubled to $12.46 billion.

From the group’s report: “Uber may have reason to want to overbook given its safety history, but the fact is that by setting its own reserve amount, it determines the cost of its own insurance premiums. The majority of those premiums are set by Aleka.”

Ramona Prieto, Uber’s director of public policy, told lawmakers last year during discussions on the bill that about 45 percent of ride fares in Los Angeles County and about 33 percent of fares in the rest of California can be attributed to government-mandated insurance. “These increased costs are passed directly on to people who rely on carpooling to get to work, to school, to medical appointments,” she told the Assembly’s Standing Committee on Insurance in July.

“I hope Uber will be held accountable to answer (questions)” raised by the report, Jamie Court, president of Consumer Watchdog, told CalMatters. “It’s amazing to me that they failed to mention that they are self-insured.”

Asm. David Alvarez, a Chula Vista Democrat, told CalMatters that he didn’t know Uber was largely self-funded because it was never disclosed to the committee.

“Whether or not Uber’s reserve levels are appropriate is a legitimate actuarial question,” Alvarez said in an emailed statement. “Whether this committee was given an accurate picture of where driver insurance dollars were going before it voted on this bill is a separate and more troubling issue.”

The law has some disclosure requirements, including a study of its effects. Alvarez said he hopes a study will examine the role of captive insurance agreements in setting insurance rates for companies like Uber, “so that future policy decisions can be made with full information.”

CalMatters requested an interview with state Sen. Chris Cabaldon, the Napa Democrat who wrote the law, or for responses via email. Cabaldon has “no comment at this time,” according to spokeswoman Beth Rimby.

CalMatters also contacted the offices of seven other state legislators besides Alvarez who were among those involved in discussing the legislation before it passed. Some did not answer. Neither would agree to talk about whether they knew Uber was largely self-insuring, or whether they planned to ask the company questions based on the report.

Only one legislative cabinet said it had asked Uber about the report. Danielle McGreevy, Spokesman for Asm. Bay Area Democrat Mia Bonta said Uber dismissed the credibility of the Consumer Watchdog report and was “less than forthcoming.”

Cabaldon received a campaign contribution from Uber, according to CalMatters Digital Democracy Database. Five of the eight lawmakers contacted by CalMatters, including Alvarez, also received contributions from Uber, the database shows. Bonta received no contributions from the company.

The law created by Cabaldon was connected with the passage of another bill which allowed drivers to join unions. Consumer Watchdog said Uber misrepresented the insurance bill to unions as well.

A spokesman for the Service Employees International Union of California said the union had no response. But Lorena Gonzalez, head of the California Federation of Labor, which opposed the bill as it moved through the Legislature, said in an email: “Is anyone really surprised that Uber misrepresented the situation? That’s been my experience with them for over 10 years.”

Gonzalez is a former state lawmaker, author of law that would likely upend Uber’s business model, prompting it and other big companies to write ballot measure that became law in 2020 and allowed them to continue to classify their drivers as independent contractors instead of employees.

“They are of such great benefit”

Consumer Watchdog, which decades ago wrote a voter-approved law governing insurance in California, noted in its report that the nearly $12.5 billion Uber has accumulated for its insurance reserves is more than double the $4.5 billion to $5.4 billion the group estimates the company needs. The group based its calculations on how many rides Uber provided last year and the cost of commercial auto insurance in California. Unlike company profits, insurance reserves are not taxed.

The group, citing Uber’s financial statements, also found that the company has transferred about $4 billion of its insurance reserves to cash over the past few years.

Arab, the Uber spokesman, said: “Consumer Watchdog presents speculation about highly technical insurance accounting concepts as established fact.” He also said the company’s insurance reserves “are an actuarially determined estimate of our potential liability for unpaid losses and loss adjustment costs.”

Ben Armstrong, an actuary for Consumer Watchdog, reviewed Uber’s financial documents and helped the group with the report. Actuaries analyze the financial costs of risk and uncertainty. Armstrong said Uber subsidiary Aleka is a captive insurer, which is a wholly owned subsidiary that allows the ride-hailing company to control its insurance risk, profit and investments without any transparency. That’s why, Armstrong said, he doesn’t have access to the financial information he typically has for other insurance companies, but that “it certainly looks like (Uber) is shelling out a lot more than they need to.”

“They’re taking so much advantage of their internal insurance mechanism,” he told CalMatters, adding that unless Uber decides to release more information about Aleka’s finances, his arguments seem like “words.”

Aleka’s board officers and directors are current and former Uber executives, according to its articles of incorporation, a copy of which Consumer Watchdog included in its report.

Self-insuring large companies is not unusual. Uber competitors Lyft and DoorDash also have their own insurance affiliates, their public filings with the Securities and Exchange Commission show. Neither company is as big as Uber, but Lyft had about $2.2 billion in insurance reserves and DoorDash had about $1.1 billion at the end of last year.

Opponents of the change said it would dramatically reduce protections for riders and drivers if Uber is hit by an uninsured or underinsured driver. Robert Herrell, executive director of another consumer advocacy group, the Consumer Federation of California, and a former deputy commissioner of the state’s insurance department, was among those who voiced opposition to the bill at a July hearing.

“This is not a company that is known for its candid interactions with the California Legislature and California voters,” Herrell told CalMatters. “Their goal for many years has been to reduce their costs; reducing their insurance liabilities is part of that.”

Other Uber efforts

The law Cabaldon wrote is one way Uber manages to reduce its liability; the company has qualified initiative on the state ballot in November, which would limit contingency attorney fees and medical reimbursement for all auto accidents in the state. Consumer Watchdog, along with advocacy groups and some medical providers, also opposed Uber’s proposed ballot initiative. Uber agreed to withdraw its measure from the ballot if state lawmakers pass a compromise bill this week.

Lawmakers in Washington, D.C., California are involved in Uber’s attempt to reduce its liability through federal legislation.

U.S. Rep. Vince Fong, R-Bakersfield, introduced a provision in May that would preempt state laws that hold companies like Uber liable for harm to people or property resulting from a ride-hailing trip. He framed it as an affordability issue, saying Uber and other companies are subject to frivolous lawsuits that lead to higher insurance costs.

U.S. Rep. Derek Tran, D-Cypress, Orange County, this month sent a letter signed by 33 other California Democratic members of Congress to U.S. House Leaders Mike Johnson and Hakeem Jeffries urging them to remove the provision from the massive transport and infrastructure bill Congress is considering.

“Victims may soon face a severely limited path to legal redress,” they wrote. “The bill, as currently written, would grant ride-sharing companies immunity from all injuries, sexual assaults and deaths, regardless of red flags from any criminal background check, motor vehicle background check, customer complaint, safety test or internal complaint.”

Fong’s spokesman, Nate Hampson, did not respond to questions about the congressman’s reaction to his colleagues’ opposition to his bill.

Arab, the Uber spokesman, said California passengers are already saving millions of dollars after the Cabaldon-authored law passed, but did not provide evidence. Uber must submit a formal report on the savings resulting from the law by February 1, 2027, to the governor and the Legislature.

Third-party data show that every month so far this year, California’s average customer rates have been slightly higher or about the same on the year, except for May, when the average cost per mile was $4.67, compared with $4.70 last May, according to Gridwise. The company makes an app that ride-hailing drivers use to track their earnings and expenses, and says its data is based on hundreds of millions of trips.