Progressive Insurance is entering into a licensing agreement with United Services Automobile Association (“USAA”) for intellectual property related to usage-based car insurance programs.
Progressive has six usage-based insurance (“UBI”) U.S. patents and more than one million users to date. Its current implementation of UBI, Snapshot®, accounts for more than $1 billion in premiums and currently is available in 44 states and the District of Columbia, according to the company.
“We have found that key driving behaviors predict the likelihood of a claim far better than traditional insurance rating variables alone,” said John Sauerland, Progressive's personal lines group president. “As insurers realize the benefits UBI offers consumers, it's critical they deliver programs that reflect responsible intellectual property practices, which includes licensing the appropriate IP.”
Progressive announced its licensing program in December 2012, making its intellectual property available to companies interested in implementing UBI programs, subject to the following terms:
- Term of Agreement: 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;
- Licensing Fee: 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); and
- Progressive also has the right to licensor recognition.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].