California’s rising insurance rates have prompted Uber to raise its minimum age requirement to 25 for drivers in the state.

The ridesharing company said in a statement obtained by Repairer Driven News that insurance rates for its drivers were disproportionately higher for those operating taxis or personal vehicles.

“As a result of these lopsided requirements, personal injury attorneys have created a [business] specializing in suing rideshare platforms like ours, pushing Uber’s California state-mandated commercial insurance costs to rise by more than 65% in just two years,” Uber said. “By increasing the age requirement for new drivers to 25, we hope to mitigate the growth of those costs.”

It added: “We hope to work with lawmakers, policy leaders, and industry experts to discuss legislative and regulatory changes that will improve the experience for all California drivers.”

Its main competitor in the space, Lyft, already requires drivers to be 25 to drive in all of its states except New York, where drivers can be as young as 19.

Young rideshare drivers aren’t the only ones facing challenges in the Golden State, with some Californians struggling to secure auto coverage at all, according to one industry expert.

Jerry Becerra, of Oakland-based Barbary Insurance Brokerage, said insurance companies are limiting new policies within the state because they’re struggling to remain profitable.

“A lot of companies are running a more than 100% loss ratio,” Becerra told Fox KTVU. “So that’s unsustainable over the long run.”

He attributed the trend to more drivers hitting the streets, the increased costs of repairing vehicles, and inflation.

California’s insurance rate increases must be approved by the state’s insurance commissioner before they go into effect.

During the COVID-19 pandemic, the state temporarily froze rates until late 2022. However, in a “flurry of unjustified” rate increases during the first three months of 2023, it approved rates totaling more than $1 billion, according to Consumer Watchdog.

Meantime, Insurify’s recently released Mid-Year Auto Report has indicated that the rising cost of doing business in California is prompting some insurers to exit the market.

“Higher insurance rates are driving policyholders to shop around, but certain drivers may have fewer options,” Insurify said. “Influenced by record losses and climate catastrophes, insurers are limiting operations in some states and exiting others, like Louisiana, Florida, and California, entirely.”

It added: “As insurers struggle to remain profitable, companies will prioritize lower-risk drivers. Rates for drivers with an accident, ticket, or DUI on record will be significantly higher, and in some cases, insurers may refuse to provide coverage to high-risk drivers.”

Last month, Wawanesa Mutual Insurance Company announced today that it would sell its California-based subsidiary Wawanesa General to the Automotive Club of Southern California.

According to Money.com, Topa Insurance Company will also stop writing insurance policies in California.

Rising insurance rates aren’t unique to California.

During the first six months of the year, personal auto insurance prices have increased an average of 17% in the U.S., according to Insurify’s report, which projects another 4% increase before 2023’s close.

Overall, Insurance Thought Leadership (ITL) says the auto insurance industry is in a state of “existential crisis.”

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