Progressive Insurance Gets Fourth Pay-As-You-Drive Patent

Progressive announced Monday it has been issued a fourth patent for its usage-based car insurance program, Snapshot, which electronically tracks driving behavior and offers policyholders an opportunity to earn discounts by showing safe habits and low mileage.

Photo Courtesy of ProgressiveThe insurer said in a news release that the latest patent “relates, in part, to producing a driver safety score based on monitored driving data.”

The voluntary Snapshot program, which officials say is used by 250,000 Progressive customers in 39 states and the District of Columbia—making it far larger than similar programs offered by other coverage providers—relies on data that is collected by a device inserted into the diagnostic port of an insured vehicle and relayed to the company.

Policyholders can earn savings of as much as 30 percent if the feedback shows they log relatively few miles and operate the vehicle safely when it comes to factors such as acceleration and braking.

“For more than 15 years we have invested a great deal into the research, development, testing and piloting of usage-based insurance programs and will continue to do so,” Glenn Renwick, Progressive’s president and chief executive officer, said in a news release. “It’s gratifying to know that the U.S. Patent (and Trademark, or USPTO) office recognizes the uniqueness of our system technologies.”

The USPTO confirmed on its website that the patent had been issued on Jan. 3.

Industry insiders credit the Ohio-based insurer with leading the way on usage-based vehicle coverage programs that electronically monitor how insured vehicles are driven. The programs provide insurers with data that is more reliable than information such as a driver’s mileage estimates or publicly available data on policyholders.

Experts call the programs a win-win for both insurers and their customers. The data allows coverage providers to calculate risk and price coverage more accurately, and discount car insurance is awarded to drivers who are shown to be safe behind the wheel.

“Progressive has been an industry pioneer,” a recent report by information technology consulting firm Celent states.

Progressive Holds Important ‘Pay as You Drive’ Patents

According to a report from the Brookings Institution, Progressive has “aggressively sought” telematics-related patents since the late 1990s. The title “pay as you drive” is itself registered to Progressive.

The authors of the Brookings Institution report–which was published in 2008, before many of the country’s major insurers began launching their own usage-based programs–wrote that Progressive’s patent collection could end up being a barrier to implementation of similar programs by smaller insurers, who may be concerned about sparking infringement suits.

They went on to say, though, that Progressive has expressed a willingness to license pay as you drive and that “there is legitimate question about the extent to which Progressive’s patents would be upheld in a patent-infringement suit.”

Celent Predicts Further Growth of Telematics Programs

The Celent report predicts that programs such as Snapshot will grow significantly in the future, drawing both forward-thinking insurers and motorists seeking more affordable rates.

According to Celent, 55 percent of the top 20 property and casualty insurers in the United States now offer such programs, along with 50 percent of those in the United Kingdom. The report’s author says lower manufacturing costs and other factors are making the programs more cost-effective for companies.

Snapshot allows participants to track their progress and eligibility for discounts by visiting Progressive’s website. A policyholder’s eligibility for savings is determined after the first month of his or her participation in the program, and the electronic device remains installed in the vehicle until the end of the six-month policy term in order to determine a renewal discount.

To research how Progressive performs when handling claims, consumers can read user-submitted Progressive auto insurance reviews online.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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