There's a difference between driving another person from A to B and charging that person. As a comparison you can invite a friend to your house and cook for them. If you start charging people for that there will be food safety regulations etc. you need to comply with.
In the UK we have an excellent 0-to-5 point rating scheme for all establishments that serve or prepare food. It includes Street food vendors, kiosks, even schools. All sellers are required to show their "number" at the front door or POS, you can verify it online. You used to be able to see the inspectors report too (sadly it seems they removed that feature and replaced with a summary).
It's an excellent system that warrants repetition in other industries.
Regulation done right greatly improves one's position soliciting services - I want to know if my driver has had recent accidents, speeding tickets, has poor health, doesn't pass a DBS check, can speak my language (very useful in cities you don't know), that their vehicle is safe.
So perhaps adding the insurance for Uber drivers would solve the issue? I really don't see other reason. Except for the governments fighting with concepts which disrupt current, inconvenient and outdated state of things.
In principle, being regulated means you adhere to some sort of code of conduct and are fully accountable for whatever goes wrong on your side, which is seldom the case with do-it-yourself solutions... in the latter case, you are basically on your own and good luck, aka roulette. Many people find it unsafe for several reasons not difficult to figure out.
