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Uber misled California lawmakers last year before they passed an insurance-related bill, a consumer advocacy group alleges, prompting one of the lawmakers to question the company’s interactions with the insurance committee in the Assembly.
As the ride-hailing giant pushed to lower the required insurance coverage it must carry for uninsured and underinsured motorists, Uber told lawmakers that passing Senate Bill 371 would be good for consumers because insurance costs were rising. It passed, reducing Uber’s liability for uninsured and underinsured motorists from $1 million to $60,000 per person and $300,000 per incident.
But a May report from Consumer Watchdog found that the company mostly self-insures, meaning it was paying its own subsidiary insurer and amassing a stockpile of tax-free reserves.
Uber spokesperson Zahid Arab denied that the company misled lawmakers during the legislative process, saying they were “fully aware that the state’s rideshare insurance requirements were uniquely expensive and driving up costs for riders and drivers.”
Consumer Watchdog examined Uber’s public financial filings and found that its subsidiary, Aleka Insurance, insures almost 95% 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 possible insurance liabilities — doubled to $12.46 billion.
From the group’s report: “Uber may well have reason to want to overreserve, given its safety history, but the fact is by setting its own reserve amount it is setting the price of its own insurance premiums. The vast majority of those premiums are set by Aleka.”
Ramona Prieto, Uber’s director of public policy, told lawmakers last year during discussions about the bill that about 45% of ride-hailing fares in Los Angeles County and about 33% of fares in the rest of California could be attributed to government-mandated insurance. “These inflated costs are passed directly to the people who rely on rideshare to get to work, to school, to doctor’s appointments,” she told the Assembly Standing Committee on Insurance in July.
“I would hope Uber would be held to account to answer (questions)” raised by the report, Jamie Court, president of Consumer Watchdog, told CalMatters. “It’s amazing to me that they neglected to mention that they’re self-insuring.”
Asm. David Alvarez, a Democrat from Chula Vista, told CalMatters that he did not know that Uber largely self-insures 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 rider insurance dollars go before voting on this bill is a separate, and more troubling, question.”
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 arrangements in insurance rate-setting for companies such as Uber, “so that future policy decisions are made with full information.”
CalMatters asked to interview State Sen. Chris Cabaldon, the Democrat from Napa who wrote the law, or for answers by email. Cabaldon has “no comment at this time,” according to spokesperson Beth Rimbey.
CalMatters also contacted the offices of seven other state lawmakers besides Alvarez who were among those involved in discussing the legislation before it passed. Some did not respond. None would agree to talk about whether they knew that Uber largely self-insures, or whether they plan to ask the company questions based on the report.
Only one lawmaker’s office said it had asked Uber about the report. Daniel McGreevy, a spokesperson for Asm. Mia Bonta, the Democrat from the Bay Area, said Uber dismissed the credibility of the Consumer Watchdog report and was “less than forthcoming.”
Cabaldon has received a campaign contribution from Uber, according to the CalMatters Digital Democracy database. Five of the eight lawmakers CalMatters contacted, including Alvarez, also have received contributions from Uber, the database shows. Bonta has not received contributions from the company.
The law authored by Cabaldon was tied to the passage of another bill that allowed ride-hailing drivers to unionize. Consumer Watchdog said Uber misrepresented the insurance bill to unions, too.
A spokesperson for Service Employees International Union California said the union did not have a response. But Lorena Gonzalez, head of the California Labor Federation, which opposed the bill as it was going through the Legislature, said in an email: “Is anyone really surprised that Uber misrepresented the situation? That has been my experience with them for over 10 years.”
Gonzalez is a former state lawmaker who authored a law that would likely have upended Uber’s business model, prompting it and other gig companies to write a ballot measure that became law in 2020 and allowed them to continue classifying their drivers as independent contractors instead of employees.
‘They benefit so much’
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 amassed 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 a company’s profit, the insurance reserves are not taxed.
The group, citing Uber’s financial reports, also found that the company has transferred about $4 billion of its insurance reserves to cash in the past couple of years.
Arab, the Uber spokesperson, said, “Consumer Watchdog is presenting speculation about highly technical insurance accounting concepts as settled fact.” He also said the company’s insurance reserves “are an actuarially determined estimate of our potential liability for unpaid losses and loss adjustment expenses.”
Ben Armstrong, Consumer Watchdog’s actuary, reviewed Uber’s financial filings and helped the group with its report. Actuaries analyze financial costs of risk and uncertainty. Armstrong said that Uber’s Aleka subsidiary is a captive insurer, which is a wholly owned subsidiary that allows the ride-hailing company to control its insurance risk, profit and investment without any transparency. Therefore, Armstrong said, he doesn’t have access to the financial information he usually would for other insurance companies, but that “it sure looks like (Uber is) putting away way more than they need.”
“They benefit so much from their in-house insurance mechanism,” he told CalMatters, adding that unless Uber decides to release more information about Aleka’s finances, its arguments seem like “lip service.”
Aleka’s officers and board directors are current and former Uber executives, according to its articles of incorporation, a copy of which Consumer Watchdog included in its report.
Large companies self-insuring is not uncommon. Uber competitors Lyft and DoorDash have their own insurance subsidiaries, too, 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, as of the end of last year.
Opponents of the change said it will drastically reduce protection for riders and drivers if an Uber is hit by an uninsured or underinsured motorist. Robert Herrell, executive director of another consumer advocacy group, Consumer Federation of California, and a former deputy commissioner in the state insurance department, was among those who voiced his opposition to the bill at that July hearing.
“This is not a company that’s known for their truthful interactions with the California legislature and California voters,” Herrell told CalMatters. “Their objective for many years has been to reduce their costs; reducing their insurance obligation is part of that.”
Uber’s other efforts
The law Cabaldon wrote is one way Uber has succeeded in reducing its liability; the company had qualified an initiative for the state’s November ballot that would limit lawyer contingency fees and recoveries of medical costs for all car crashes in the state. Consumer Watchdog, along with attorney groups and some medical providers, also opposed Uber’s proposed ballot initiative. Uber has agreed to pull its measure from the ballot if state lawmakers pass a compromise bill this week.
In Washington, D.C., California lawmakers are involved in Uber’s attempt to reduce its liability through federal legislation.
U.S. Rep. Vince Fong, a Republican from Bakersfield, in May introduced a provision that would preempt state laws that hold companies such as Uber responsible for harm to people or property arising from a ride-hailing trip. He framed it as an affordability issue, saying Uber and other companies are being targeted by frivolous lawsuits that are driving insurance costs higher.
U.S. Rep. Derek Tran, a Democrat from Cypress in Orange County, this month sent a letter signed by 33 other California Democratic members of Congress to the leaders of the U.S. House of Representatives, Mike Johnson and Hakeem Jeffries, urging them to strip the provision from the massive transportation and infrastructure bill Congress is considering.
“Victims may soon face a heavily restricted path to legal recourse,” they wrote. “The bill as currently written would provide rideshare companies with immunity from any injury, sexual assault, and fatality case no matter the red flags from any criminal background check, motor vehicle background check, customer complaint, safety test, or internal complaint.”
Fong’s spokesperson, Nate Hampson, did not respond to questions about the congressman’s reaction to his colleagues’ opposition to his bill.
Arab, the Uber spokesperson, said California riders are now saving millions of dollars since the law written by Cabaldon was passed, but did not provide proof. Uber must submit a formal report on the savings that results from the law by Feb. 1, 2027 to the governor and the Legislature.
Third-party data shows that each month so far this year, average customer fares in California were slightly higher or about the same year over year, except for in May, when the average fare 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.
The new law also requires the state Insurance Department to collaborate with the Public Utilities Commission on a study of the effects of reducing the required insurance coverage. That study is due by Dec. 31, 2030.
