A Cognizant report published last year, titled “A pragmatist’s guide to the Metaverse,” said if you ask three people what the Metaverse is, you’ll get three different answers.
CM’s sister publication Insurance Journal recently tested that theory and dissected the developing virtual landscape through an insurance-focused lens.
Late last month, a panel of three insurance experts discussed their views and predictions regarding insurance and the Metaverse for Insurance Journal’s webinar, Insuring the Metaverse: Immersive Tech and the Future of Coverage. While their definitions of the Metaverse varied slightly, they did agree on one thing: Insurance can find a home in this new, immersive world.
What Is the Metaverse?
Craig Weber called it “the next revolution in how people interact with things.”
Garrett Droege explained that it’s essentially “a real-time, 3D environment that all the users experience simultaneously.”
Dennis Winkler said he thinks of it as “a virtual reality space where users can interact with each other in a computer-generated environment.”
If this sounds familiar, that’s because the Metaverse isn’t some faraway idea. Components of it already exist.
“The answer I normally give people is, if you have children (or grandchildren), look at the video games they’re playing right now,” said Droege, director of innovation and strategy for IMA Financial. “Fortnite. Roblox. Minecraft. These are all Metaverses. They’re having shared experiences in a 3D environment with their friends, solving little objectives (and) having fun hanging out in the same place. Just a virtual environment.”
Still, the idea of the Metaverse as a singular concept that unifies many platforms — like the ones listed above — has yet to be realized. Droege believes it will get there. But he said that currently, “we are nowhere close to having the computing power necessary to actually operate the Metaverse at scale.”
He thinks we’re five to 10 years away from that materialization.
“We don’t really have the computing power to provide ubiquity and reach and the ‘always on’ aspect of the Metaverse that is where people think it could eventually go,” added Weber, the head of insurance strategy at Cognizant. “We’re very early on, and it’s hard to imagine how we make these jumps that are 10 years out. But it’s certainly on a progression where we’re headed that way.”
Future Opportunities for Insurers
Panelists said in some ways, insurance will be no different in the Metaverse, with big dollars simply being invested in digital assets.
“The opportunity is an entirely second world that insurance companies could insure,” Droege explained. “So, I think that the more progressive insurance companies out there could look at that opportunity as a new revenue stream that doesn’t currently exist for them. And the demand is there.”
He later said that while “we aren’t seeing a lot of insurance requirements yet,” they are coming, pointing to examples of virtual concerts that can be sponsored like traditional, in-person events. If the event became inaccessible, he said, sponsors could stand to lose money.
This is why Droege believes traditional insurance — like event cancellation insurance — will become a required product. He explained that digital assets of all kinds are already being insured today, and he can only dream of how that will evolve.
An important question remains: Could Metaverse coverage be unintentionally wrapped into a policy?
Winkler, a director in the ISG insurance industry vertical, encouraged carriers to gather legal teams to discuss this issue as quickly as possible. Whether digital assets are included or excluded, he advocated against ambiguity and in favor of clarity.
Droege said some carriers are, whether knowingly or unknowingly, picking up this coverage today. He recommended they not eliminate coverage entirely to collect actuarial data for future products.
Creating New Experiences and Connections
Weber believes the Metaverse platform could be tapped to improve customer experiences. As younger demographics enter their primary insurance consumption years, more interacting through new technology is an opportunity, he said. The big uptick in remote work prompted by COVID-19 also familiarized many people with virtual possibilities, he added.
Winkler sees the Metaverse as an opportunity for “insurance companies to start thinking about a way to be more hip, more modern and attract some of the younger staff.” He believes the Metaverse presents new ways to build culture and gather teams. He shared that Accenture, for example, is already tapping into virtual reality onboarding and training.
Insurance is relationship-driven, so Winkler encouraged agents and companies to begin envisioning how they could facilitate their relationships in the Metaverse. Maybe it’s a virtual recreation of an agent’s office.
“There’s lots of cool things people could do to sort of give people an experience that they’ll remember,” Winkler explained, “and increase the brand value and build relationships. And maybe they might sell some insurance.”
Droege offered parting words to insurers regarding the Metaverse, saying: “There’s plenty of money here. There’s money and digital assets that people would like to protect. So, I would just say we need to get away from the mindset that we have to have everything figured out before we start writing products for this space. The only way this space is going to grow is if we provide some protection. And we’ll learn along the way.
Droege said the industry will pay some claims. “But ultimately, we’ll further expand this entire ecosystem because of it.”
The full webinar, Insuring the Metaverse: Immersive Tech and the Future of Coverage hosted by Elizabeth Blosfield, Deputy Editor at Carrier Management, includes discussions that touch on NFT insurance, potential regulation within the Metaverse and technology fatigue. Panelists included Dennis Winkler, director, insurance practice at ISG; Craig Weber, head of strategy, insurance practice at Cognizant; and Garrett Droege, SVP and director of innovation and strategy at IMA Financial Group. The webinar is available for free on Insurance Journal Research & Trends.