"With constant hurdles, insurers must make a collaborative effort to think of the most effective ways they can utilise these emerging technologies within their organisations. And when they do, there are numerous advantages and endless opportunities for those companies who are willing to accept the metaverse."
- Ameen Hemani, Publicis Sapient senior consultant
This couldn’t be more applicable to the insurance industry and the growing divide between legacy companies and insurtech disruptors. The traditional names in the sector that have been slow-moving in adopting digital technologies has resulted in insurtech firms becoming more notable and appealing.
Utilising digital technologies should now be the norm within the insurance industry, AXA France became the first insurance and banking player to enter the virtual world with their meta-gaming experience in the The Sandbox Metaverse, showing how companies are responding to their customers with fun and proactive digital solutions.
Digital is here to stay, so we need to keep up with it
Initially people were under the impression that digital meant “transient” or “temporary” because of its obviously intangible nature. But it has since been acknowledged that these new technologies; the metaverse, Web3, NFTs, are all adding value to the security of a consumer's digital assets. By embracing these new technologies, insurers have developed digital ways in which their customers can insure them.
AON is one such ‘legacy’ insurer. They have welcomed digital protection with their offer of digital asset and blockchain insurance solutions, including Crime and Specie insurance. Elsewhere, Lloyds of London struck up a partnership with CoinCover in order to safeguard any cryptocurrency being stored in online wallets against hacking.
Specialist insurer and cryptocurrency investor, Beazley, launched their own service ‘Cryptoguard’, which aims to eliminate the liability risks faced by companies operating in the crypto realm. Blockchain has traceable, non-editable data, which can help to stop fraud within the insurance industry.
These innovations are only the start, and it will be fascinating to see how insurers develop from this initial technology and utilise more of what Blockchain has to offer in terms of innovation.
Distribution and marketing
Insurers must not overlook the importance of using the metaverse within the distribution and marketing silos of the business. With the evolution of the metaverse, new technologies have been adopted by advertisers and marketers in other industries.
Larger insurance firms can adopt new technologies, following in the footsteps of Nike, DBS and many other brands, in creating virtual spaces and events within the two most popular metaverses Fortnite and Roblox. This can attract younger, more tech-savvy audiences. For example, Heungkuk Life Insurance, a South Korean firm, opened a ‘virtual counselling window’ in the metaverse, enabling customers to visit the agency with a virtual reality headset.
Understand underwriting, payments, and claims
Underwriting, payments, and claims is another area ripe for disruption. With cryptocurrency playing a larger role in how consumers are handling transactions, insurance companies must be adaptable to accommodate this. For example, AXA Switzerland have authorised private customers to pay their premiums using Bitcoin.
Additionally, the blockchain technology powering cryptocurrency can be used for claims and underwriting. This technology offers real-time data collection, which may allow for a faster claims process. This data has facilitated the creation of the first multinational insurance policy powered by Blockchain by AIG, IBM and Standard Chartered.
Chinese financial services company, Ant Group, introduced a blockchain-based digital operation platform called ‘Xingyun’. The platform was established to enhance operational efficiency and the customer experience. Ant Group have stated that the tool can identify 107 types of verification documents with an identification accuracy rate above 95%.
People, process, and technology
Investing in the right people with a good level of data literacy and an understanding of emerging technologies is crucial.
The process in which insurance is handled by both customer and insurer is being affected by new technologies. In response, our ways of communication and handling will have to change dramatically. Prospective customers are more likely to come through online channels rather than via the traditional face-to-face method of pre-Pandemic times.
The biggest obstacle facing the insurance industry is the slow pace in which it evolves. For example, the data & tech capabilities are currently trailing far behind other industries; it needs to nail these capabilities before it can lock down the metaverse, crypto, and others of this type.
Equally, the tech needed to facilitate the metaverse is very expensive. Just the virtual reality headsets alone are costly, leading to some smaller insurance firms struggling to keep up with the demand. But there are other technologies evolving - the blockchain does not require the use of headsets and would be a more realistic option for smaller insurance firms.