Have you heard of the metaverse? If not, you may have noticed Facebook has rebranded itself as Meta in honor of this up-and-coming technology. The metaverse is a quickly developing immersive virtual platform that will be a whole new way of interacting with people, places, and things online. The line between reality and virtual reality is very fine in this up-and-coming platform. — So much so that you can even own digital versions of things which exist in the physical world. Like real-world assets, goods in the metaverse are vulnerable and must be protected. That’s where the insurance industry comes in.
What is The Metaverse?
According to tech experts and insiders, the metaverse is considered the next evolution of the internet. It will be a new way for people to interact with each other online that goes far beyond social media platforms and Zoom calls. What particularly sets the metaverse apart is that it’s a 3D technology shared experience that takes place in real time. It’s as though you’re in the same space as someone else, but it’s completely online.
According to Dennis Winkler of the global technology research and advisory firm ISG, a simple definition of the metaverse is “a virtual reality space where users can interact with each other in a computer-generated environment.” Virtual reality video games are the closest experience to the metaverse that some are familiar with now, at the beginning of 2023.
One benefit of the metaverse is the ability to connect and collaborate with people in other states or countries in real time without having to be there physically. The metaverse could connect people in higher numbers, from greater distances, and at a more interactive level than ever before.
While we’re still in the early stages of development, people are already investing in assets they’ll use in the metaverse in the future.
Assets in the Metaverse
Within the metaverse, people will be able to acquire a variety of virtual assets, just like in the physical world. These may include (believe it or not) real estate, art, and modes of monetary exchange. That means an entire “second world” out there will need to be insured.
Many questions still surround the protection of digital assets. For example, how is a digital asset damaged? What does it mean to “lose” digital assets through theft? Virtual goods and services will have unique risks that have yet to be sorted out.
What Role Will Insurance Play?
Experts aren’t exactly sure what role the insurance industry will play in the metaverse just yet. But just as we currently offer insurance to protect goods and services in the physical world, there will be a need to offer insurance for other goods and services in the metaverse. All activities, including virtual activities, come with risks. Metaverse users will need insurance to guard themselves against the risks of owning virtual property and hosting virtual events.
Virtual Events
Already, there are virtual events like concerts, conferences, and trainings that draw people in large numbers from all over the world. Many events have sponsors and give away virtual goods (swag) to attendees. Companies also pay to advertise through the platform or the speakers/influencers.
Lots of resources are poured into planning and executing these online experiences. If an event were to be inaccessible for some reason or canceled entirely, the sponsors would need protection for their investment in the event. Event cancellation insurance will likely be required for online events in the near future.
Luxury Goods
Insurance will also be needed for digital assets, including digital twins of high-end goods like top-shelf whiskey and haute couture clothing. Companies are backing up their digital twin through NFTs (non-fungible tokens) to verify brand authenticity. There’s already trademark litigation around digital twins in the metaverse, as people will use a logo like the Nike swoosh without having permission to use it.
Land in the Metaverse
Will it be possible to own land and buy property insurance in the metaverse? It’s a difficult concept to fathom, but plans are in the works. If people can purchase shares of land and buildings, there will be a need for a virtual form of property insurance.
Other Activities & Assets in the Metaverse
Other activities that could require insurance include virtual asset trading, virtual currency transactions, virtual gaming, and even virtual travel. The possibilities are endless and difficult to imagine. Everything we do and have now in the physical world could potentially have a virtual version or digital twin in the metaverse.
For insurance agencies, this is a new (virtual) land of opportunity. We can benefit from the metaverse by offering users a sense of security while interacting online.
The Insurance Agency Storefront in The Metaverse
Believe it or not, insurance carriers are already extending their storefronts into the metaverse. People are already shopping and conducting business on the “main street” of the metaverse. An insurance agency can set up a storefront in the metaverse just like any other business and have a virtual agent there.
There are infinite possibilities. The digital storefront could have a kiosk where clients could plug in their digital wallets and insure their digital assets like cryptocurrencies or NFTs that way. There could be virtual shelves or catalogs that people can peruse virtually as they shop for coverage.
An agent could provide virtual advice on risk management, and, as a reward for listening to a sales pitch, a potential client could have an opportunity to earn virtual t-shirts, hats, or other items. The metaverse makes it easier to bring fun into doing business.
With the variety of other products and storefronts popping up in the metaverse, a wide variety of digital goods and services will soon need insurance.
Personal Connections in The Metaverse
A crucial aspect of the insurance industry is making personal connections and building relationships, so with the introduction of the metaverse and the natural increase in virtual interactions, insurance agencies will need to be deliberate about maintaining the human element.
To make the best use of the metaverse while maintaining the personal touch, consider which processes can be automated through metaverse technology and which really need that office visit and handshake or friendly voice over the phone. In some ways, convenience made possible through tech makes a personal connection by showing the client that you value their time.
The metaverse also makes it possible to recreate the agent’s office digitally. You can still meet with a client virtually over a tastefully decorated office or even across a recreated kitchen table. Creative use of the online space and interactions can help maintain the human touch and make lifelong agent-client relationships.
Final Thoughts on The Coming Metaverse
The metaverse is coming, whether we personally participate in it or not. Professionally, there’s an opportunity to prepare for an entirely new area of business in the insurance industry. That said, the time to prepare for the coming metaverse is now. Have your team begin educating themselves on this immersive technology so that you’re ready to make the best use of it when available. There’s no question about whether insurance will be needed in the metaverse. It’s only a matter of when. This technology will be here before we know it, and with all the newly created assets, those who prepare will be in the best position to financially benefit.