A legal battle is taking shape between two firms hoping to provide automated insurance underwriting capability to banks and other financial services companies.

Lincoln National Risk Management Inc., the technology affiliate of Fort Wayne, Ind.-based reinsurance company Lincoln Re, has filed suit alleging intellectual property infringement against Allfinanz Inc., an e-commerce software company.

The lawsuit comes as several companies race to create a system able to underwrite, quote, and issue life insurance policies via platforms at bank branches and call centers. Allfinanz claims to have created a system capable of issuing a temporary life insurance policy at a bank branch within 30 minutes. A permanent policy would be issued after further review.

However, in a suit filed in U.S. District Court in Fort Wayne, Lincoln Re alleges that by making, using, offering to sell, and selling its suite of software systems and components Allfinanz infringes upon Lincoln National's 1990 risk assessment patent and a 1998 patent on a decision-making system.

Lincoln National alleges that its automated life insurance underwriting software products, including the Lincoln Underwriting System, are protected by patent.

The lawsuit asks the court to declare that the risk assessment patent is being infringed, grant an injunction against continued infringement, and award monetary damages. Gary Penner, a spokesman for Lincoln Re, said the complaint does not specify a dollar amount. He declined to discuss the lawsuit beyond that.

Gary Frisch, a spokesman for Allfinanz, which has dual headquarters in Dublin and New York, said the case is an instance of a larger problem: patenting business processes.

"Whether or not it is valid to patent business processes is yet to be determined," Mr. Frisch said. "Amazon.com patents the one-click, and we're not sure whether or not that's legal. This could all be unclear for a while."

It also won't be the final lawsuit in this area, according to Kenneth Kehrer, president of Kehrer Associates in Princeton, N.J., a research and consulting firm with expertise in bank distribution of investments and insurance.

"It used to be that a dictum of financial products couldn't be patented," Mr. Kehrer said. "But once companies started getting patents on the technology underlying the products, it created the question of who owns what? It's unclear … who actually owns intellectual property, especially since much of the technology development at a financial institution is outsourced."

No court date has been set in the Lincoln Re lawsuit.

Meanwhile, Allfinanz continues to seek out banks wanting to issue life insurance products through its system. It has three banks as direct clients, including Toronto-Dominion.

"Our goal is to have a quarter of the bank assurance volume using our platform," said Richard Heil, executive vice president of strategic development for Allfinanz in Park City, Utah. "While we're in discussion with lots of banks, some have to decide whether it costs more to build it themselves or if it makes more sense to join us."

Life insurance products from Travelers Life and Annuity, Life of Virginia, First Colony, and Reinsurance Group of America are available through Allfinanz. Property and casualty lines are not yet available, but Mr. Heil said Allfinanz hopes to add them "by late fall or in the winter."

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