How Will The Metaverse Change Commercial Insurance?

The world has been on the path towards complete digitization since the early 1990s. For instance, in 1991, the first 2G cellular network was unveiled, and that was followed by 5G 28 years later, which expanded digitization. The advancements have meant that much more of our environment, events, and other objects now need to be rapidly digitized if they aren't already, often in multiple formats.

Digital Twins is a term used to describe digitized and born-digital content. So, moving forward, for the Metaverse to capture not just production in the dynamic, contemporary, and possibly the future, there is a need to increasingly digitize elements from the past.

There is an urgency driving the need to bring products, content, and services to the on-demand platform for customers regardless of whether they choose to connect with it through the internet or use some other type of sustainable hardware.

Organizations like those that offer commercial insurance will have to undergo what's termed as rapid digital transformation across all aspects of the business's personnel, products, culture, and the services offered.

So how will the Metaverse change commercial insurance? The time to bring insurance products and commercial insurance to the digital marketplace is right now. Businesses that don't do this today will end up playing catch-up when it comes time to participate and possibly take advantage of the Metaverse.

We've seen market innovation racing towards the evolution of asset classes with the use of avatars, 3D models, spatial environments, and mixed reality. The asset classes can work together with the metadata to help create profiles of businesses and individuals, which will then populate the Metaverse.

Sure, many of the formats may be understandably proprietary or perhaps platform-specific. While these will quickly scale innovation, the Metaverse will also become portable, and there is a need for interoperability of the assets and content between them.

In the commercial insurance industry, for instance, the critical aspects of portability will include the publishing and transparency of documentation, uniquely identifies for businesses, and risk assessment being ported to the Metaverse.

All of this will need to operate seamlessly, making it possible for businesses to apply for something like workers' compensation insurance or business liability insurance almost entirely via the Metaverse because all information needed is already there.

The ability to directly transfer assets from one platform to the other without using intermediary services will be the major diving force of the Metaverse, especially when it comes to providing insurance products.

Insurance underwriters will have to work with broadened artificial intelligence that uses the common data model for the Metaverse. The enhanced common data model, like the one developed by Microsoft, adds a holistic approach to data management in the Metaverse, which, if adopted by others, will help expand the ecosystem.

How will the Metaverse change commercial insurance? However, for this to be possible, there needs to be further cooperation and collaboration between the government, insurance companies, non-profits, banks, and other major entities.

The Metaverse will also have to be cross-platform, which means that it should be able to work across partners seamlessly. It is only once that happens that business owners will be able to apply for insurance, get approved, and make a claim without leaving the Metaverse.

On the other hand, insurance companies will be able to work with large batches of data, analyzing risk and assigning a premium based on the amount of risk involved. When paired with artificial intelligence, this will work faster than it does today.

Here are some ways the Metaverse could impact business insurance:

• New types of risks: As businesses enter the Metaverse, they may be exposed to new types of risks that traditional insurance policies may not cover. For example, a business operating in the Metaverse could experience cyberattacks, virtual property damage, or even reputational harm caused by negative online interactions.
• New types of coverage: As new risks emerge, insurance companies may need to develop new types of coverage to address them. For example, a Metaverse-specific insurance policy may cover cyberattacks or virtual property damage.
• New ways to assess risk: Insurance companies may use data from the Metaverse to assess risk in new ways. For example, they could use data from virtual sensors to track the behavior of avatars and identify potential risks.
• New ways to settle claims: In the Metaverse, it may be more difficult to determine liability and damages in the event of a claim. Insurance companies may need to develop new processes to handle claims in this environment.
• New types of partnerships: As the Metaverse evolves, insurance companies may partner with virtual platforms or businesses operating in the Metaverse to provide coverage or risk management services.

The Metaverse as it stands today is in its infancy. Most insurers will not see the benefit of jumping into the Metaverse because it offers little in the way of return on investment. The investment here is mainly of time and money.

However, business insurers or even insurance companies, in general, will want to develop a strategy of how they transfer their activities over to the virtual world so that their business is compatible with the forthcoming virtual reality.

Not to mention that it is essential to mention that in as little as three years, we'll start seeing a skyrocketing number of jobs across thousands of industries in the Metaverse; many of these industries will be new but will require insurance. If anything, insurers can potentially make trillions from the boom, but only if they are first.

At present, the strategy seems to be building a Metaverse around your brand. That means creating user-driven engagement with an immersive digital experience. In simple terms, insurers will want to automate, streamline, and digitize every part of the process. Many insurers are already taking this approach, and those that do will be ahead.

Creating a virtual analogy of an insurance product could perceivably be the first step towards selling business insurance as a product compared to service in the Metaverse. That way, businesses that open shop in the Metaverse or individuals seeking personal insurance can buy the insurance product based on how well it is packaged to offer them the best bang for their buck.