Introduction: Six elements that make up the metaverse
The Metaverse Framework advocated by PwC defines the following six components of the Metaverse.
- Economy
- Interoprability
- Governance
- Identity（ID）
- Experience
- Persistence
Of these, the Metaverse can provide insurance companies with new experiences that do not exist in the real world (Experience), creating a new economic zone (Economy), while establishing unified rules is necessary.
1. Potential impact of the metaverse on insurers
First of all, the Metaverse experience is an experience obtained through an avatar, which is another self in the virtual space. In addition to being able to approach customer avatars through their own avatars, insurance companies will be able to experience experiences freed from the physical constraints of reality (for example, fires, natural disasters, and simulated experiences of being in a hospital room when hospitalized). etc.) can also be provided.
The new economic zone refers to a state in which transactions such as crypto assets and Non-Fungible Tokens (NFT) based on blockchain technology have become more active than ever, and the scale has grown to match the transaction volume in the real world. increase. In such a future, digital data such as land and buildings in virtual space will become common as personal economic assets, and there will be a need to compensate for these assets. In addition, insurance companies can also consider adding NFTs and crypto assets themselves to their investment portfolios.
In this paper, we will consider the business opportunities that social penetration of the Metaverse development company will bring to insurance companies’ value chains, and the capabilities necessary to seize such business opportunities and improve customer value.
2. Business Opportunities Metaverse Brings to Insurance Companies
With the spread of the Metaverse, customer needs to prepare for unprecedented new risks will arise, and the approach to customers will change as social and economic activities through avatars become more active. In addition, there is a possibility that the digitalization of administrative procedures from contract to insurance payment will progress further, and asset management using NFTs and crypto assets will become common.
New risks and insurance products brought about by the Metaverse (mainly for non-life insurance companies)
Damage assumed by existing insurance is mainly caused by natural phenomena that are difficult for humans to control, such as typhoons, earthquakes, and the onset of illness. It is thought that the inherent risks will converge on the following human-induced risks.
a. When the Metaverse is attacked by a malicious third party
Customer data managed by the platform may be stolen or lost due to hacking by a malicious person, and the economic value of the customer on the metaverse may be damaged. In addition to the economic value, there is also the risk of being harassed by an avatar operated by a malicious person and losing dignity.
b. Unintentional infringement of rights recognized in the real world.
NFT trading has been active since 2021. The objects that are traded as NFTs are wide ranging, and there are NFTs that target digital art, music, and things that exist in the real space. NFT refers to the technology and data itself that records transaction history data such as objects, parties, and amounts on the blockchain. There are lawsuits focused on infringement of rights. If the issue is the infringement of rights guaranteed in the real world, it is thought that what and to what extent activities in the virtual space are permitted will be gradually defined through courts and other means.
Business transformation from sales activities to insurance claim payments
New experiences in virtual space and the spread of economic activities backed by blockchain technology will lead not only to product development, but also to business reforms such as insurance sales activities, insurance premium claims and protection, and insurance payment. It is possible.
a. Sales activity
Avatars are active entities in the Metaverse. Potential customers use their avatars to participate in events on the Metaverse development solutions and interact with other avatars. Therefore, it is believed that insurance companies will conduct sales activities for avatars in the future.
First, it is conceivable to use the Metaverse as a place for marketing and branding to raise awareness of insurance companies. Since there are no physical restrictions in the virtual space, it should be possible to conduct unprecedented marketing activities such as placing advertisements in the air. Furthermore, considering that many young users are participating in the Metaverse platform, which has strong game elements, branding activities on the Metaverse may be effective as an approach to future generations.
Second, the ‘immersive experience’ in the Metaverse could provide opportunities for customers to better understand the value of insurance products. Until now, insurance agents have explained the significance of insurance in preparation for emergencies using statistical data and their own experiences. , you may realize the value of insurance. By having customers experience simulated effects of probabilistic events, such as car accidents and fires for non-life insurance companies, and the onset of illness for life insurance companies, customers will be able to experience and recognize risks that they were not aware of before. It provides opportunities. However, in order to realize it, it is necessary to solve practical issues such as whether the production is excessive from the viewpoint of customer protection.
Finally, all customer behavior on the Metaverse is recorded as data. If it becomes possible to analyze data such as avatar activity history, purchase history, and relationships with other avatars, it will be possible to propose insurance against risks in virtual space and existing insurance in a natural way. maybe. However, such corporate activities may not be desirable from the viewpoint of personal information protection. Furthermore, what is said to be the ideal state of the Metaverse is that individuals have discretion over their own data, rather than specific platformers controlling their data. Therefore, it is necessary to consider future developments while paying close attention to the development of laws and the trends of policies for personal information protection of platform operators.
b. Conclusion of contract, receipt of claims, preservation, and payment of claims
Insurance companies have been promoting the digitization of administrative procedures for some time, but as they begin to sell insurance products that prepare against risks in the virtual world, they will digitize not only sales activities but also the process from contract to insurance payment. will be For example, in a world where the subject of guarantees is digital assets, contracts are issued using NFT technology, and insurance premiums and claims are paid using crypto assets, all events are converted into data, Few tasks that need to be handled in the physical space may cease to exist. In addition, there are efforts by insurance companies to build a digital twin of the physical space on the Metaverse and conduct damage investigation training. prize. The digitization of insurance companies is expected to accelerate further with the advent of the Metaverse and related technologies.
Crypto assets as a means of asset management
Along with the development of the Metaverse, asset holding and trading using crypto assets and NFTs is becoming more popular. Overseas, insurance companies are already starting to see crypto-assets as an investment destination. As such, investing in crypto assets may be worth considering, for example, for life insurers looking to overseas alternative assets.
3. Capabilities necessary for insurers to deliver value
As we have discussed so far, as the Metaverse permeates society, insurance companies will have contact points with customers on the Metaverse and will be able to conduct sales activities in a way that is not subject to physical restrictions in the real world. Investment opportunities will also increase, and it is thought that insurance products and services that compensate for risks in the metaverse will be sold.
However, in order to be able to work in the new field of the Metaverse and provide value, it is necessary to acquire appropriate capabilities.
The first thing you need is the ability to integrate your company’s management strategy with trends in Metaverse-related technology and decide what to do. Next, based on the established strategy, insurance companies are required to utilize Metaverse-related technologies and knowledge in their own value chains to improve customer value. Furthermore, in order to support the new insurance value chain, insurance companies need to transform their corporate functions as follows.
IT (development/cyber security)
Currently, in order to utilize the Metaverse, it is necessary to partner with a platform provider that provides a virtual space, and it is unlikely that an insurance company will build a metaverse integration services platform on its own. However, for example, understanding the minimum required resources, processes, costs, etc. when opening a base on the Metaverse, realizing the company’s requirements while utilizing external resources, and being able to use it for business in a secure state. should be provided by the IT department and relevant departments as a minimum capability.
Finance/Risk Management/Compliance
In order for insurance companies to conduct transactions in the new economic zone brought about by the Metaverse, it is necessary to properly account for crypto assets, NFTs, data on the Metaverse, etc. In addition, cryptoassets and NFTs have high price volatility, and an appropriate risk management system is required so as not to damage management indicators such as the solvency margin ratio. In addition, the legal department should actively collect information and provide information across departments so as to keep a close eye on the development of laws and not lose business opportunities.
HR (remote work and training using Metaverse)
The Metaverse has the potential to support not only customers of insurance companies but also employees to learn various work styles and skills. As a start, various platformers are trying to provide virtual offices, and Metaverse is attracting attention as a new form of remote work. In addition, according to a survey conducted by PwC , employees who experienced immersive training learned more than regular training. should also be taken into account.
As described above, in order to capture the changes and business opportunities brought about by the Metaverse and improve customer value, it is important to take a bird’s eye view of the capabilities of the entire company and transform them, rather than using them locally.
