Cheap Vehicle Insurance, Progressive and Its Patents
This scenario, though, is dependent on Progressive having and maintaining exclusive access to usage-based rating structures. Snapshot won’t necessarily ensure success for Progressive if all the other guys get their own Snapshot-like auto insurance discount programs with similar effectiveness and adoption rates.
But aside from the fact that Progressive Insurance already has a couple years’ worth of a head start on the other major insurers, it also has a handful of patents related to usage-based pricing models. A 2008 paper on pay-as-you-drive insurance from the Brookings Institution said Progressive has four major patents that could prohibit, or at least impede, other insurers’ adoption of usage-based pricing. According to the report’s authors, at least three of the four patents “involve a ‘monitoring system for determining and communicating the cost of insurance.’” For example, they quote the following section from one of the company’s patents: “A process for acquiring and recording vehicle insurance related data during a time period via an on-board computer and recording system for adjusting an insurance cost.”
The Brookings Institution said there may be some weaknesses to Progressive’s patents, however, and that other insurance providers may ultimately end up being able to use the technology. But it could be a hard-fought battle, they say, and we could see that battle playing out sooner rather than later. In May, Progressive submitted a complaint to a U.S. district court saying that it is “suffering from the effects” of patent infringement, and mentions State Farm’s Drive Safe & Save program and The Hartford’s TrueLane program directly in the complaint. How that complaint is handled could have serious implications down the road.