"We've always said that we'd be willing to license this technology down the road," he says. "This is the type of innovation and intellectual property that will dramatically shift how consumers think about insurance. We believe the right time to make the technology available to others in the marketplace is 2015."

Hollyer makes it clear that Progressive is not licensing its software, algorithms or technology.

"What we are licensing is the right to offer a UBI program without infringing on our patents," he says. "We expect that a range of carriers—big and small—will be interested in licensing agreements.  We also feel that there will be widespread consumer demand for UBI. We've heard for years from our customers that good drivers deserve to pay less for their insurance."

Progressive's Snapshot UBI program gives drivers an opportunity to earn a discount based on their safe driving habits, explains Hollyer.

"Customers that earn a discount are happy; retaining their policy for longer periods of time," he says. "That's a win for insurance carriers and agents. In addition to retention, we've heard from our agents that Snapshot is a great new business driver and source of referrals."

The licensing fees Progressive intends to charge are dependent on written premium, explains Hollyer.

"The calculation for the fee structure is an annual royalty payment equal to licensee's countrywide private passenger auto insurance direct written premiums for the most recently reported year, multiplied by two basis points (0.02 percent)," he says.

Hollyer points out additional terms of the agreement include:

• Commences the date license is executed through April 2022
• Waiting Period: Licensees will not rate insurance based on its customers' driving habits prior to April 1, 2015
• Progressive also has the right to licensor recognition
• Application for licensing under these terms is open through June 2013, with payments commencing with usage on or after April, 2015.