Under some

patent laws A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A p ...

, patents may be obtained for

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

-related

invention An invention is a unique or novel device, method, composition, idea or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an i ...

s. Historically, patents could only cover the technological aspects of a new insurance invention. This is still the case in most countries. In the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

, however, recent court decisions have encouraged more inventors to file patent applications on methods of doing business. These patents may be used to get more comprehensive coverage of improvements in basic insurance processes, such as the methods of calculating

premium Premium may refer to: Marketing * Premium (marketing), a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products * Premium segment, high-price brands or services in marketing, ...

s, reserves,

underwriting Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabilit ...

, etc. This is causing controversy in the insurance industry as some see it as a positive development and others see it as a negative development.

History

An early example of an insurance patent is
Means for Securing Travelers Against Loss by Accident
This patent was issued in 1892. It discloses a means for selling travelers' insurance by combining coupons with a newspaper. A more recent example of an insurance patent is , granted as "Individual evaluation system for motorcar risk". This patent issued by the

European Patent Office The European Patent Office (EPO) is one of the two organs of the European Patent Organisation (EPOrg), the other being the Administrative Council. The EPO acts as executive body for the organisation

in 1996 to Salvador Minguijon Perez. It discloses a means for auto insurance risk selection whereby a driver’s mileage and driving behavior are monitored and insurance premiums are charged accordingly. The United Kingdom part of this European patent has been sold to Norwich Union insurance company.

Growth

Historically, only about one or two patents per year issued in the US on inventions specifically related to insurance policies. This changed dramatically, however, with the 1998 State Street Bank Decision. The State Street Bank Decision was a ruling by the Court of Appeals for the Federal Circuit that confirmed that there was no “ business method exception” under United States patent law. The number of patent applications filed per year after this decision was handed down jumped to about 150. The number of patents issuing per year jumped to about 30. This changed dramatically again in 2014 after the '' Alice Corp. v. CLS Bank International'' decision by the

Supreme Court of the United States The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

, holding that an abstract idea does not become patentable just because it is implemented on a computer. After ''Alice,'' the allowance rate for U.S. patent applications in the financial arts, including insurance, plummeted.

Litigation

In September 2006,

Lincoln National Corporation Lincoln National Corporation is a ''Fortune'' 200 American holding company, which operates multiple insurance and investment management businesses through subsidiary companies. Lincoln Financial Group is the marketing name for LNC and its subsi ...

filed a

patent infringement Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may v ...

lawsuit - A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil actio ...

against Transamerica Life Insurance Company and other entities for allegedly infringing , “Method and apparatus for providing retirement income benefits”. This patent covers methods for administering variable annuities. The jury found the patent valid and infringed. The court ordered Transamerica to pay Lincoln $13 million in damages. At a rate of 11

basis point A basis point (often abbreviated as bp, often pronounced as "bip" or "beep") is one hundredth of 1 percentage point. The related term ''permyriad'' means one hundredth of 1 percent. Changes of interest rates are often stated in basis points. If ...

s of assets under management, this was considered a reasonable royalty. In June 2010, however, the verdict against Transamerica was overturned on appeal In June 2010,

Progressive Auto Insurance The Progressive Corporation is an American insurance company, the third largest insurance carrier and the No. 1 commercial auto insurer in the United States. The company was co-founded in 1937 by Jack Green and Joseph M. Lewis, and is headquar ...

filed a patent infringement lawsuit against Liberty Mutual over one of Progressive’s

Pay As You Drive Pay may refer to: *A wage or salary earned for work *The process of payment Places * Pay-e Borj, a village in Lorestan Province of Iran *Pay-e Kal-e Garab, a village in Ilam Province of Iran * Pay-e Rah, a village in Khuzestan Province of Iran * ...

auto insurance patents.

Controversy

Some in the insurance industry see the growth in insurance patents as a positive development. They cite that by being able to protect inventions, insurance companies will be more inclined to invest in new product development. Some are concerned that the growth in patent claims will be negative. They are concerned that invalid patents will issue and that this will lead to

patent troll In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or ...

s inhibiting new product introductions by demanding excessive license fees for these questionable patents.

Public review

Inventors can now have their insurance U.S. patent applications reviewed by the public in the

Peer to Patent The Peer To Patent project is an initiative that seeks to assist patent offices in improving patent quality by gathering public input in a structured, productive manner. Peer To Patent is the first social-software project directly linked to decisio ...

program. The first insurance patent application to be posted wa
US2009005522 “Risk assessment company”
It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies to get better rates.
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Notable patents

*. First patent on telematic automobile insurance. Commercialized as

PAYD Usage-based insurance (UBI), also known as pay as you drive (PAYD), pay how you drive (PHYD) and mile-based auto insurance, is a type of vehicle insurance whereby the costs are dependent upon type of vehicle used, measured against time, distance, b ...

auto insurance in the UK. *. Patented

disability insurance Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for completion of core work func ...

for a defined contribution pension plans. Adopted by IBM for their employees.

References

{{DEFAULTSORT:Insurance Patent Insurance law Patent law