The metaverse – part 2: How should insurers engage?
In The Metaverse – part 1: Should insurers care? I explained what the metaverse is, how Web 3.0 turns it possible and the hype around what Meta and Microsoft have defined as “the virtual world that will usher in the next phase of the internet”3. We read industry experts argue that NOW is the moment to reflect and act to play an active part and benefit from the metaverse economy that Citi estimates4 to be worth $8 trillion to $13 trillion by 2030.
In this 2nd part, we shall consider how the metaverse is impacting insurance, suggest an approach to engage with this phygital world and show how some of our industry practitioners are going forward.
The way the metaverse will impact insurance is seen potentially in 2 ways by PWC5. Firstly, it creates and amplifies new and emerging digital asset classes, and insurers will need to assess those risks and provide coverage. Secondly, the metaverse becomes a new economy, and ecosystem, for insurers to transact in, and for insurers to communicate with customers on. While the metaverse currently seems to mimic many of the ways we interact in real life, it will invariably create new forms of virtual communication and information exchange that businesses will need to adapt to.
Thinking of the areas of the insurance business that will be affected by the metaverse, Publicis Sapient11 mentions:
- Admin and product development will need to dedicate efforts to create and develop new covers for digital assets which consumers increasingly care for and want to be protected.
- Following the examples of brands such as Nike, DBS and Time Studios12, creative insurers may also benefit from the metaverse in the distribution and marketing
- The uniqueness, trust and traceability brought by blockchain technology and a universe in which one may move instantly from one place to the other will facilitate an effective underwriting process, reduce fraud in claims and render payments in cryptocurrencies possible.
Publicis Sapient goes on to point to 3 important factors that need to be carefully considered when engaging in the metaverse. The people that will lead the company on its metaverse journey need a high level of data literacy as well as sufficient knowledge and understanding of emerging technologies. As referred to above, many processes, such as underwriting claims and payments, will need to adapt. Finally, technology-wise, the cost of the equipment necessary to access the metaverse is high. Hence the latter may reduce over time, blockchain does not require the use of a headset to engage with.
Looking at concrete initiatives & Insurance players that are already engaging the Metaverse
Animoca Brands, a global leader in gamification and blockchain, invested $10 Mn in GOQii to launch Health Metaverse7 – The smart tech-enabled healthcare platform of GOQii brings together the entire preventive healthcare ecosystem to its users, amongst which fitness tracker, app, coaching, health store, insurance, and many others. By doing so, Aminoca Brands looks to contribute to building the open metaverse.
Insurance brokerage firm IMA Financial Group announced the launch of IMA Web3Labs8, the metaverse’s first insurance and risk management research and development facility, to be located in Decentraland, a virtual world based on blockchain technology. Web3Labs sets new industry expectations for exploring, testing and bringing to market risk and insurance strategies specific to the metaverse.
Qualcomm has set up a $ 100 million fund to invest in virtual and augmented reality technologies to help metaverse jump start9. They will also establish a funding program for software developers creating virtual and augmented reality content in areas such as gaming, health and wellness, media, entertainment, education, and business content.
Sigortambir, the recent winner of the 2022 TDI InsurTech Innovation Awards for the EMEA region10, set up what they describe as the first insurance centre on the Metaverse. They invested in the Metaverse in anticipation of demand for insurance products in the virtual world, which will include insuring land, vehicles, avatars, clothes, and crypto-wallets. Among the innovations Sigortabir has harnessed, its virtual office is built on a decentralised platform, OVRLand, and users can visit the office, speak to advisors, and get their insurance policies via WhatsApp or email.
Decentralized Finance (DeFi) initiatives and application based on blockchain technologies are multiplying. Nimble presents itself as a Licensed Decentralized Insurance Marketplace, where one “pays for insurance, not insurance companies”. In this insurance platform built on the Algorand blockchain, Nimble stresses that underwriters, actuaries, claims assessors, appraisers, insureds, capital providers, and more work in a decentralized environment. Each is paid for his work, is rewarded for his participation; and together, as part of the larger Nimble community, they are building a stronger and more secure future.
We are just at the dawn of the Web 3.0 era and of the metaverse. Many challenges remain and the insurance industry has only scratched the surface of potential applications. Nevertheless, as the metaverse gathers interest and more people and companies reflect on the opportunities it unveils, new use cases appear which in turn grow the prospects and its potential. Not being possible to predict with great certainty what the metaverse will be like in 5 to 10 years and to what extent it will impact our day-to-day life, having looked deeper into the topic one understands something is happening.
Now is the time to engage and start experimenting with the metaverse. Insurers who do so will gain a strategic and tactical advantage over their competitors in discovering how to create value and benefit from it, in the digital and physical world. The longer an insurer waits to begin the experimentation, the more likely he will fall behind the competition as it targets the insurance buyers of the future, who find the metaverse exciting and inviting.
10 In: Award Applications