New laws to tackle unregulated taxi clubs in Victoria will not be effective, according to Taxicare Australia MD George Karas.

He says operators and drivers join the clubs, which offer “the veneer of proper insurance”, to save money.

But in the event of accidents the clubs attempt to avoid paying claims and extraordinarily high excesses are revealed, he says.

Up to 70% of Victoria’s taxis may be operating without effective third-party property damage insurance.

Last month the Taxi Services Commission released a 63-page regulatory impact statement on the effects of new laws designed to improve customer service and competition.

But Mr Karas has written to commission Chairman Graeme Samuel saying the new laws will have little impact on unregulated clubs.

The legislation requires all operators to have third-party cover, but he believes this is not enough.

“As it stands, the impact of the new law – in terms of ensuring all taxis are properly insured in Victoria – will achieve very little,” Mr Karas said.

“What is happening, and what will continue to happen under the new laws, is that in practical terms the insurance cover offered is in name only because of exorbitant excesses in the contract – often in the tens of thousands of dollars.

“Such policies give unregulated, unlicensed taxi clubs in Victoria the veneer of supplying quasi third-party damage insurance, when in reality few such claims are ever pursued or paid.”

Mr Karas told insuranceNEWS.com.au the commission should make a deal with general insurers to cap excesses. “Then the problem will be solved – there will be no middleman.”

Melbourne-based Taxicare covers cabs nationwide and deals directly with operators and drivers.