With the pervasive use of computers in our lives, the line between what's mine and yours sometimes gets blurred. I read an interesting post on TechDirt today that describes a patent that Big Blue, International Business Machines Corp. (NYSE: IBM) was awarded. The article, entitled "IBM Patents Real-Time Auto Insurance Surcharges," describes the patent as "Location-Based Vehicle Risk Assessment System, which describes how surcharges will be added to your auto insurance premium when a GPS device reports that you drove into an area in IBM's bad neighborhood database."

While this certainly sounds invasive, it's part of a larger trend in the insurance industry that actually benefits us consumers. In fact, I've written before about Pointer Telocation Limited (Nasdaq: PNTR), a small Israeli firm that markets technology similar to that of Lo-Jack's. In my interview with the Pointer Chairman, Yossi Ben Shalom told investors about a project underway in the U.S. called "Pay as You Go," in which insurance companies are testing programs with technology providers like Pointer that would revolutionize the auto insurance industry.

According to Ben Shalom, "Some people in the industry are talking about a discount or incentive program to build insurance policies on a multitude of parameters. Instead of just selling a policy based on the collective risk profile of the insured, "Pay as You Go" would calibrate premiums on a month-to-month basis based on specific data on how and who drove the car. Imagine a policy that didn't charge a family with a 16-year old driver when he didn't drive the car that month. Which roads the insured drove on, who drove the car, when the car was driven – all this data can be supplied via Pointer equipment to an insurance firm. There are some small pilot tests going on currently which we are involved in. Right now, we're talking about a very small percentage of the overall market but this could be a big driver for Pointer in the future because you need our technology for this."

Looks like IBM wants to get in on a project that could ultimately lower our auto insurance premiums. Clearly, no one wants their insurance company or anyone spying on them but with the right incentives and consumer protections, this new technology and new program could be great, no?

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.