In the past we often thought of digital as being temporary/transient due to its non physical nature. However, new technologies such as the metaverse and, in particular, Web3 and non-fungible tokens (NFT’s) have shown that the modern consumer places value on their digital assets and their security. As such, new technology has allowed insurers to develop new products that cater to those interested in insuring their digital assets.

One such firm that has embraced digital protection is AON: The legacy insurer offers digital asset and blockchain insurance solutions, including Crime and Specie Insurance for the theft of digital assets. Meanwhile, the corporate body, Lloyds of London recently partnered with CoinCover to protect cryptocurrency held in online wallets against theft or other malicious hacks.

Another company that has invested in cryptocurrency is specialist insurer Beazley. In 2022, the insurance firm launched their product ‘Cryptoguard’ which is designed to address the Directors and Officers liability risks faced by all types of companies operating in the crypto space. Beazley’s product gives customers access to an integrated team of underwriters and claims managers with a deep understanding of crypto, making it ideal for anyone from emerging startups to established public and private organizations.

Due to the traceable and non-editable nature of the data, blockchain technology can help to highlight and eliminate common sources of fraud in the insurance industry. Fraud costs more than $40 billion USD a year and is currently difficult to detect. However, as data within a blockchain is traceable, insurers will be able to see if a customer has made multiple claims from the same incident, even if the claim was made through different companies.

Undoubtedly, one of the biggest and most obvious ways that new technology, and in particular, the metaverse, can be used by insurers is in the distribution and marketing silios of the business.

As seen in other industries, the metaverse provides a raft of advertising and marketing opportunities to businesses of all shapes and sizes. Larger insurance firms can embrace the metaverse by following the examples of Nike, DBS and even TIME Studios' collaboration with Epic Games, who have all previously created a number of unique virtual events within two of the most popular metaverses, Fortnite and Roblox.

The metaverse can also be used for distribution purposes as well, with insurers creating their own virtual meeting spaces and workshops aimed at targeting younger, more tech-savvy audiences. The South Korean firm Heungkuk Life Insurance recently opened a ‘virtual counseling window’ in the metaverse, allowing customers to visit the agency using a virtual reality headset. Meanwhile, AXA have also committed to the metaverse, stating that they intend to open a virtual agency within the metaverse which would be specifically tailored to providing new services for the virtual world.

Additionally, the metaverse can also be used to host personal one-to-one conversations with customers who prefer using a 3D virtual space instead of a telephone or video call.

Along with marketing, the biggest area that new technology will affect in insurance is within the realms of underwriting, payments and claims.

Cryptocurrency is one of the biggest tentpoles of Web3, and is a vital part of our theorized digital future. Following the coronavirus pandemic the popularity of crypto has skyrocketed, in response to the increasing popularity of crypto, AXA Switzerland have since enabled private customers to pay for select premiums with bitcoin.

In addition to paying for premiums, the blockchain technology that powers cryptocurrency can also be used for claims and underwriting.

The blockchain technology that powers crypto enables automated real-time data collection, which could dramatically speed up the claims process. For example, in 2022, Chinese financial services company Ant Group launched a blockchain-based digital operation platform for insurance companies in China.

Named ‘Xingyun’, the platform promises to help insurers improve operational efficiency and customer experience throughout every level of a business. According to the Ant Group, the AI-powered digital tool can identify 107 types of verification documents with an identification accuracy rate above 95%.

Meanwhile, the process of underwriting can also become much more transparent, quicker and efficient through the use of blockchain technology as well. The traceable data trail left by Blockchain can help to foster transparency, and has been the backbone in facilitating the landmark, three-way collaborative effort by IBM, AIG and Standard Chartered to create the world’s first multinational insurance policy.

As highlighted in our article on how insurers can become more digitally effective, there are essentially three factors that must be taken into consideration when assessing the impact that the metaverse, Web3 or any new technology will have on the Insurance industry, namely the ‘People’, ‘Processes’ and ‘Technology’.