Progressive Releases First Details on Snapshot Licensing

Progressive formally announced a future licensing program for its usage-based insurance (UBI) technology last week, shedding light on how the insurer plans to share for a fee what it says are its intellectual property rights to six patents that power its Snapshot Discount program.

According to the announcement, the cost to licensees will be 0.02 percent of their nationwide premiums collected for personal auto insurance policies. So if a company that collected $100 million in annual personal auto policy premiums, for example, wanted to license the product, the annual fee would be $20,000.

Progressive will accept applications for licensing its UBI technology through June, but usage won’t be permitted until April 1, 2015.

Rights to the license continue through April 2022, according to a release from the insurer.

UBI programs offer auto insurance discounts to policyholders based on how they use their vehicle, often lowering policy costs for motorists who drive less or exhibit safe behaviors like braking slowly. Driving behavior is tracked through an in-car monitoring device.

This year has seen a glut of developments in the UBI market, including major expansions of programs offered by Allstate and State Farm late this year. Progressive saw its own major development this summer, when the insurer offered its Snapshot program to consumers at all insurers for a free 30-day trial.

Progressive CEO Glenn Renwick touched on the licensing terms early last month, telling investors that he invited other companies “to show interest” in the program as the insurance carrier was close to being awarded its sixth UBI-related patent. Earlier this month, Progressive publicized that patent and said it includes in-car audio alert technology based on driving data.

As Renwick said during his meeting with investors, Progressive intends to “defend” its hold over its patents.

“We have been developing and refining our industry-leading UBI program for more than 15 years and have been awarded six patents for good reason,” Renwick said.

Progressive filed a lawsuit in federal court this summer against The Hartford and State Farm, claiming that those companies’ UBI programs infringed on its own usage-based patents. A preliminary schedule for the ongoing case was released on Dec. 18 and outlined future court dates for its pretrial phase; the next major date on that schedule is set for Jan. 18, when parties will hold a conference of “good faith attempts to reduce or narrow claims in dispute.”

Active in 43 states and Washington, D.C., Snapshot is the most widely available UBI program from a major insurance company.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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