Uber and Lyft are both much cheaper than traditional "regulated" taxis, and this scheme only cost the other company and driver. So as a consumer, why do I care?
Well you should care, because if you get into an accident, you're paying on your own. That's what the family of this poor girl hit by an Uber driver found out.
A key aspect of Uber's business model is that it claims it is not a transportation provider, it does not employ any of the drivers accepting rides on its platform, and it does not accept liability for their actions. The state Public Utilities Commission in September voted to require Uber to get a $1 million per incident commercial liability policy, but Uber — which argues the PUC has no jurisdiction to regulate a communications application — has appealed that ruling.
And frankly I see no justification for Uber not to get insurance coverage for their drivers.
For comparison, look at New York's taxi medallion system. All it has done is raise the entry price to astronomical levels, which leaves the consumer paying outrageous prices and the drivers making very little.
I agree that the NYC regulatory system is rife with abuse, but the fault lies in the execution. All laws are prone to abuse if your have corrupt politicians in charge. You can't use the excuse that laws have the potential to be abused to not pass any laws or regulations.
I would argue instead that there should be some regulation, as least insofar as the public safety and health hazard aspects are concerned. Lets face it- all private enterprises are in the business to make money. One way of doing that is to reduce costs as low as possible, including paying for things like insurance, background checks on drivers etc. If there is no legal compulsion you can bet that they will cut these costs to the bone.