Seattle eases limit on ridesharing companies, but keeps strict insurance requirements in place
Washington, DC taxi drivers park their cars in protest as they demand an end to ride sharing services such as Uber X and Lyft on June 25, 2014, in Washington, DC [AFP Photo]

By Eric M. Johnson

SEATTLE (Reuters) - Seattle lawmakers eased limits on ridesharing companies on Monday, handing a victory to a nascent industry that has emerged in scores of cities to compete with traditional taxis.

Seattle City Council voted 8-1 to remove restrictions imposed earlier this year on the numbers of cars used by UberX, Lyft and other companies, which let customers hail rides through smartphone apps from drivers using their own vehicles.

But it kept in place tougher insurance requirements on the rideshare companies, brought in in March, addressing one of the main criticisms of the new operators.

Many traditional taxi companies and a number of city administrations have balked at the rise of the rideshare industry, protesting against what they see as a lack of regulation covering licensing, safety and insurance coverage.

Austin, Texas, began threatening to impound ridesharing cars last year, prompting another service, Sidecar, to leave town.

Seattle's lawmakers raised similar objections in March, limiting each of the ridesharing companies to 150 drivers on the road at any one time.

But as a public campaign built against the limits in a city known for its embrace of innovation, Mayor Ed Murray assembled taxi owners, dispatchers, for-hire owners, and ridesharing firms for weeks of meetings aimed at balancing competing interests.

Monday's vote also allowed 200 more licenses for traditional taxi companies over four years.

"Today's vote to authorize ridesharing recognizes that regulations can be modernized to allow new industries to thrive while maintaining the highest level of public safety," said Lyft spokeswoman Chelsea Wilson.

The one council member to oppose the new measures, Mike O'Brien, said the public had not been given a proper chance to vet the bill.

Supporters say ridesharing companies are often cheaper than their traditional competitors.

But UberX has faced criticism in recent months for its practice of surge pricing, in which it increases the cost of a car ride – sometimes several times over – at times when demand is highest, such as during a snowstorm. UberX Chief Executive Travis Kalanick has defended the practice as an example of market-driven efficiency.

(Editing by Andrew Heavens)