View source for Insurance patent

{{Patent law}}
Under some [[patent|patent laws]], '''patents''' may be obtained for '''[[insurance]]-related [[invention]]s'''.  Historically, patents could only cover the technological aspects of a new insurance invention.<ref>[https://www.nytimes.com/2003/06/30/technology/30PATE.html?ei=5007&en=01b31db998d0242c&ex=1372392000&partner=USERLAND&pagewanted=print&position= Chartrand, Sabra "Protecting Ideas in the Insurance Business"] [[New York Times]] June 30, 2003</ref>  This is still the case in most countries.  In the [[United States]], however, recent court decisions have encouraged more inventors to file patent applications on [[business method patent|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 [[insurance|premium]]s, [[Actuarial reserves|reserves]], [[underwriting]], 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==
[[Image:USpatent467872.JPG|thumb|Early example of an insurance patent]]An early example of an insurance patent is {{US patent|467872}} [http://www.google.com/patents?vid=USPAT467872&id=0TZqAAAAEBAJ&pg=PP1&dq=%22insurance+policy%22&num=100&as_drrb_ap=q&as_minm_ap=1&as_miny_ap=2007&as_maxm_ap=1&as_maxy_ap=2007&as_drrb_is=b&as_minm_is=1&as_miny_is=1797&as_maxm_is=1&as_maxy_is=1900#PPP1,M1 Means for Securing Travelers Against Loss by Accident]{{dead link|date=February 2025|bot=medic}}{{cbignore|bot=medic}}.  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 {{Cite patent|country=EP|number=0700009|status=application}}, granted as {{Cite patent|country=EP|number=0700009B}} "Individual evaluation system for motorcar risk".  This patent issued by the [[European Patent Organisation|European Patent Office]] 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.<ref>[https://patents.google.com/?oq=%22insurance+policy%22 Google patent search on “insurance policy”]</ref>

This changed dramatically, however, with the 1998 [[State Street Bank v. Signature Financial Group|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 patent|business method]] exception” under [[United States patent law]].  The number of [[patent application]]s filed per year after this decision was handed down jumped to about 150.  The number of patents issuing per year jumped to about 30.<ref>{{usurped|1=[https://web.archive.org/web/20070927235706/http://www.marketsandpatents.com/IPB-02152007.mht Insurance IP Bulletin, February 2007, “Statistics”]}}</ref>

This changed dramatically again in 2014 after the ''[[Alice Corp. v. CLS Bank International]]'' decision by the [[Supreme Court of the United States]], 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.<ref>[http://www.bilskiblog.com/blog/2017/01/surviving-alice-in-the-finance-arts-1.html Bilski Blog: Surviving Alice in the Finance Arts]</ref>

==Litigation==
In September 2006, [[Lincoln National Corporation]] filed a [[patent infringement]] [[lawsuit]] against [[Aegon N.V.|Transamerica Life Insurance Company]] and other entities for allegedly infringing {{US patent|7089201}}, “Method and apparatus for providing retirement income benefits”.<ref>[http://www.foley.com/publications/pub_detail.aspx?pubid=3598  David G. Luettgen, “Foley Sponsors Conference on Business Method Patents for the Financial Services Industry”, Sept. 12, 2006] {{webarchive|url=https://web.archive.org/web/20070506165540/http://www.foley.com/publications/pub_detail.aspx?pubid=3598 |date=2007-05-06 }}</ref> This patent covers methods for administering [[variable annuity|variable annuities]].  The jury found the patent valid and infringed.  The court ordered Transamerica to pay Lincoln $13 million in damages.<ref>{{Cite web |url=http://www.desmoinesregister.com/article/20090219/BUSINESS/902190356/1029 |title=Karen, Mracek, "Patent case ruling to cost Transamerica $13 million", Des Moines Register, Feb 19, 2009 |access-date=February 21, 2009 |archive-url=https://wayback.archive-it.org/all/20090221065422/http://www.desmoinesregister.com/article/20090219/BUSINESS/902190356/1029 |archive-date=February 21, 2009 |url-status=live }}</ref>  At a rate of 11 [[basis point]]s of [[assets under management]], this was considered a reasonable royalty.<ref>{{usurped|1=[https://web.archive.org/web/20110714035826/http://www.marketsandpatents.com/bulletin/IPB-02152009.html Nowotarski, Mark, “What is a reasonable royalty?” Insurance IP Bulletin, February 15, 2009]}}</ref>  In June 2010, however, the verdict against Transamerica was overturned on appeal <ref>[http://www.patentlyo.com/patent/2010/06/business-method-patents-insurance-companies-fighting-over-patented-annuity-plans.html#comments Business Method Patents: Insurance Companies Fighting over Patented Annuity Plans Patently O blog, June 23, 2010]</ref>

In June 2010, [[Progressive Auto Insurance]] filed a patent infringement lawsuit against [[Liberty Mutual]] over one of Progressive’s [[Pay As You Drive]] auto insurance patents.<ref>[http://www.cleveland.com/business/index.ssf/2010/06/progressive_files_suit_against.html Shaheen Samavati “Progressive files suit against Liberty Mutual”, The Plain Dealer, June 21, 2010]</ref>

==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.<ref>{{usurped|1=[https://web.archive.org/web/20051226013449/http://www.marketsandpatents.com/Patents%20Pending%20Insurers%20No%20Longer%20Enjoy%20%20AM%20Best%20June%202004%20(1).pdf Bowers, Barbara “Patents Pending, Insurers no longer enjoy open season on the product innovations of competitors.” Best’s Review June 2004]}}</ref>

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]]s inhibiting new product introductions by demanding excessive license fees for these questionable patents.<ref>[http://www.insurancenetworking.com/protected/article.cfm?articleId=3505 Rutkowski, Therese, “Carriers Unaware of IP Ownership Threats and Opportunities”, Insurance Networking News, August 2005]</ref>

==Public review==
[[File:US29055227A1 Bakos.png|thumb|right|First Insurance Patent Application posted for [https://web.archive.org/web/20090510094423/http://www.peertopatent.org/patent/20090055227/activity public review] ]]
Inventors can now have their insurance U.S. patent applications reviewed by the public in the [[Peer to Patent]] program.<ref>{{usurped|1=[https://web.archive.org/web/20081120131154/http://www.marketsandpatents.com/bulletin/IPB-08152008.html Mark Nowotarski "Patent Q/A: Peer to Patent", Insurance IP Bulletin, August 15, 2008]}}</ref> The first insurance patent application to be posted was [https://web.archive.org/web/20090510094423/http://www.peertopatent.org/patent/20090055227/activity 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.<ref>{{usurped|1=[https://web.archive.org/web/20090827073215/http://www.marketsandpatents.com/bulletin/IPB-12152008.html Bakos, Nowotarski, “An Experiment in Better Patent Examination”, Insurance IP Bulletin, December 15, 2008]}}</ref>

==Notable patents==
*{{Cite patent|country=EP|number=0700009|title=Individual evaluation system for motorcar risk|pubdate=1996-03-06|inventor1-last=Minguijon Perez|inventor1-first=Salvador}}.  First patent on [[telematic]] [[automobile insurance]].  Commercialized as [[PAYD]] auto insurance in the UK.
*{{Cite patent|country=US|number=6235176|title=Computer apparatus and method for defined contribution and profit sharing pension and disability plan|pubdate=2001-05-22|inventor1-last=Schoen
|inventor1-first=Matthew Bernard|inventor2-last=Khodara|inventor2-first=Jean-Philippe|assign=MB Schoen & Associates}}.  Patented [[disability insurance]] for a [[Pension#Defined_contribution_plans|defined contribution pension]] plans.  Adopted by [[IBM]] for their employees.

==See also==
* [[Insurance]]
* [[Business method patent]]

== References ==
{{reflist|30em}}

{{DEFAULTSORT:Insurance Patent}}
[[Category:Insurance law]]
[[Category:Patent law]]