Pay as You Drive (PAYD) is becoming a popular choice with Progressive insurance customers. Unfortunately many aspects of the PAYD system are owned by Progressive. Progressive has a patent for the PAYD system and as of yet are not letting any of their competitors into the game without threatening legal action.
Patents by car insurance companies, specifically business methods, can enable an insurance company to be able to sue their competitor if they offer a similar option that uses one of their patented methods.
The PAYD system tracks how much a driver actually drives as well as the amount of time a driver is driving over 75 mph. The way the tracking occurs is controlled by a patent that Progressive owns. If a competitor was to set up a similar system then the company would be infringing upon a legal patent. Progressive could then sue the competing insurance company that was using their patented ideas.
The PAYD system may or may not stand up after a legal challenge in court. Regardless of if the PAYD patent and other business idea patents, there is just too much control for simply having a business idea.
Patents by car insurance companies are proving to be very expensive to consumers as there are no other options available for the consumer who wants a product similar to the patented PAYD system. There is no need for Progressive to cut the price on the PAYD system because there is no competitor as they control the patent.
The problem is focusing on Progressive and their PAYD system, but it affects all consumers of automobile insurance products.
In an open and free market business should not be limited on what they can use simply because a competing company patented a business process.
The patents are not necessarily actual products but may be simply ideas. Patenting new innovations and products is a great way to encourage more innovation. The problem though is patenting not a product but a system. These patents by car insurance companies will increase the cost to consumers.
In a free market society insurance companies should not be able to legally patent simple ideas such as tracking how fast someone travels in their car.